Core Viewpoint - Gold prices have recently declined from a near four-week high due to a modest rise in the dollar, but uncertainty regarding the U.S.-China trade agreement has limited the decline. Central banks are increasingly sourcing gold from domestic mines to bolster their reserves [1][8]. Central Bank Strategies - Central banks are turning to local gold mines to secure gold, which supports local industries and avoids impacting foreign exchange reserves. Countries like the Philippines and Ecuador have been doing this for years, and more central banks are considering direct local purchases [2][4]. - According to a World Gold Council survey, 19 out of 36 central banks are currently buying gold directly from domestic artisanal and small-scale miners, with four more considering it. This marks an increase from the previous year [3]. Economic Benefits - Purchasing gold directly from local mines is often cheaper than buying on the international market, as central banks can acquire gold at a slight discount. For instance, Ghana's Gold Board has agreements to buy 20% of gold output from local mining companies [5][8]. - Buying domestic gold allows central banks to grow their reserves using local currency, thus not sacrificing other reserve assets like the U.S. dollar [12]. Geopolitical Context - The rising global debt levels and geopolitical risks are prompting central banks to strengthen their reserve buffers. Approximately 95% of central banks surveyed expect their peers to increase gold reserves in the coming year [13]. Support for Local Industry - Central banks are incentivized to support local mining operations, which generate jobs and bolster local economies. However, purchasing gold from local mines can come with risks related to labor practices and environmental concerns [15][16]. - Central banks have the potential to improve the supply chain for artisanal and small-scale miners, providing a legal and fair outlet for their gold, which can enhance traceability and accountability [17][18].