The Governor of the Bank of Ghana (BoG), Dr. Johnson Asiama, has announced that the central bank is preparing to roll out a gold hedging programme to manage price risks associated with its gold reserves.
The move comes as part of broader efforts to cushion Ghana’s economy from commodity price shocks, limit the consequences of unexpected market fluctuations and reinforce monetary stability.
Dr. Asiama disclosed that the Bank is considering starting with a fraction of the current stockpile and scaling it up to a maximum of a third of the total gold reserves.
He said hedging all BoG’s stock of gold reserves would be too expensive, and the full implementation is expected before the end of 2025.
“We are currently engaging some banks that could manage the programme and should take off in a few months,” he said.
Ghana’s rising gold reserves
As of May 30, 2025, Ghana’s official gold reserves stood at 32.16 tonnes, following an addition of 0.59 tonnes since the beginning of the year.
The estimated market value of Ghana’s 32.16 tonnes of gold reserves, based on a spot price of $3,355 per ounce, is approximately $3.47 billion.
This estimate is derived from the conversion rate where one metric tonne equals 32,150.7 troy ounces.
By multiplying 32.16 tonnes by 32,150.7, the total comes to 1,034,224.112 troy ounces.
When this figure is further multiplied by the spot price of $3,355 per ounce, the result is a total value of $3,470,909,792.56.
The reserves represent a key part of the country’s international assets and monetary buffer.
Gold is currently trading at a spot price of around $3,355 per ounce as of August 3, 2025.
Spot prices reflect real-time market rates for gold and are influenced by a mix of global factors including geopolitical events, market speculation, and currency values.
Central banks, bullion traders, and investors often use this benchmark to assess the fair market value of the precious metal.
Why hedge gold?
Dr. Asiama explained that the hedging programme is designed to protect Ghana’s reserves from unpredictable swings in global gold prices.
“We believe that this will help mitigate the expected commodity price volatility that could hit the country in the coming months,” he stated.
Hedging allows asset holders to lock in future prices through derivatives such as futures contracts or options.
This can ensure predictable earnings or valuations, especially when dealing with assets like gold, which is historically volatile.
Protection from price declines
Hedging allows the BoG to secure current gold prices, insulating its reserves from sudden market downturns.
Should gold prices fall significantly, the bank will still benefit from having locked in higher prices.
Enhanced budget planning
By stabilising the value of a portion of the reserves, the programme could improve the predictability of fiscal and monetary planning.
Government and central bank policies would be less vulnerable to shocks in the global bullion market.
Strengthening of the balance sheet
A successful hedge could contribute to the bank’s balance sheet resilience, especially in a climate of economic uncertainty, and enhance investor confidence in Ghana’s financial system.
Opportunity cost if prices rise
If global gold prices continue to surge beyond the hedged levels—as they have recently—the BoG might lose out on potential windfall gains. In this case, the cost of hedging could outweigh the benefits.
Complexity and cost of execution
Hedging requires sophisticated financial instruments and counterparty arrangements, which can be expensive and require technical expertise.
There is also the risk of choosing inappropriate instruments or terms that do not effectively align with Ghana’s reserve needs.
Market timing risks
Entering a hedge at the wrong time—when prices are already peaking—may lock in returns at suboptimal levels, especially if the market reverses trend. Timing and strategy are critical to effective hedging.
With gold prices at record highs and global market uncertainties persisting, the central bank is choosing to prioritise stability over speculative gains.
Recent data from BoG reinforces this direction.
The accumulation of gold reserves has been described as a deliberate strategy to diversify holdings and anchor the local currency, especially during times of forex volatility.
The new hedging programme could mark a continuation of that strategic approach, if executed with care.
Fitch Group sends warning signal
In July, BMI, a unit of Fitch Group warned that Sub-Saharan African central banks that have added gold to their reserves in recent years could face price and liquidity crises if the value of the precious metal slides.
According to BMI, gold accounts for a third of Ghana’s reserves and is driving a surge in the cedi.
Central banks hoard 3,163 tonnes of gold in 3 years
Central banks hoarded gold at a breakneck pace over the past three years. World Gold Council data shows central banks bought 1,082 tonnes of bullion in 2022, 1,037 tonnes in 2023 and 1,044 in 2024.
This represented a significant rise from the 400-500 ton average in the preceding decade.
A survey by the World Gold Council (WGC) showed that central banks around the world expect their gold holdings as a proportion of their reserves to increase over the next five years while expecting their dollar reserves to be lower.
Gold demand from central banks has risen significantly over the past three years despite its price rally to consecutive records.
It hit an all-time high of $3,500.05 an ounce in April, up 95% since February 2022 when Russia invaded Ukraine.
Seventy three central banks responded to WGC’s survey, carried out between February 25 and May 20, and 76% of these expect their gold holdings to be higher in five years compared with 69% last year.
Nearly three-quarters of respondents expected central banks’ dollar-denominated reserves to be lower in five years compared with 62% last year.
A record 95% of respondents think central bank gold reserves will increase over the next 12 months, up from 81% last year, according to WGC’s survey, which also showed the Bank of England remains the most popular location for their gold reserves.
Potential trade conflicts and tariffs were cited by 59% of central banks in the survey as relevant to the management of their reserves, the survey showed
“A larger percentage of these came from emerging markets and developing economies – 69% – than advanced economy respondents – 40%”, the council said.
Global macroeconomic shocks have become the main source of fluctuations in commodity prices, accounting for more than two-thirds of the variance of global commodity price growth
The study of Commodity prices historical trends 1915-2024 demonstrates that markets are never static.
Geopolitical tensions and economic shocks have driven dramatic price swings over the decades.
