The central bank cited a need to improve the safety of its holdings, according to a statement published on its website last week, following a similar move by Poland, Bloomberg reported.
The move into gold follows the Hungarian monetary authority’s decision in March to relocate reserves to inside the country. The central bank in Budapest now holds almost 32 tons of the metal, meaning a share of 4,4 percent among total reserves in line with the average in Eastern Europe.
Hungary is the latest European Union nation to take this step. The purchase increases its holdings to the highest in almost three decades and comes after Poland added around nine tons of the shiny metal in July and August.
Governor Gyorgy Matolcsy said the move was not only a way to improve the security of the nation’s wealth, but also a reminder of Hungary’s heritage as one of the world’s largest gold producers in the Middle Ages.
Marton Nagy, Matolcsy’s deputy, would not comment on the growth of the bank’s overall reserves.
Poland’s central bank declined to comment on its latest gold purchases, but economists said its low price had helped make the metal more attractive. From a low in mid-August, prices have risen about 6 percent to $1 228 an ounce in London.
“With Hungary’s gold levels below average and regional peers adding to holdings, it makes sense to maintain some kind of parity,” an analyst at Raiffeisen Bank International AG in Budapest told Bloomberg.
While global central bank bullion reserves have generally expanded over the past 10 years, the purchases have mostly been driven by Russia, China and Kazakhstan.
Even though it is a large purchase for Hungary, the country is still a relatively small bullion holder, ranking outside the top 50 globally, according to World Gold Council data.
The US owns about 8 133 tons, while Romania by comparison holds some 104 tons. Russia has been adding about 20 tons on average each month this year.