Central Banks hedge dollars with gold

Gold is considered a hedge against the U.S. dollar. This makes it an attractive tool for central banks to protect against any further declines in the value of the U.S. dollar.

"The trend that we are seeing where global central banks are increasing their gold holdings reinforces the critical importance gold plays in an investment context. Gold serves a function no other investment asset can: it preserves capital, diversifies portfolios, and is highly liquid. These principals hold true for central banks as well as individual investors," says Ashish Bhatia, manager of government affairs at the World Gold Council.

Source: Private investors not the only ones adding gold to portfolios