Gold is becoming increasingly popular in Central and Eastern Europe, with this European nation planning to increase its gold reserves by about ten times.

The Czech Republic increased its gold reserves in June, as the country's central bank governor, Ales Michl, continues to implement a plan to diversify investments in order to boost profitability.

Data from the Czech central bank on Tuesday showed that the Czech Republic's gold holdings increased from 39.7 tons to 41.5 tons last month.

As of the end of June, the total value of its gold reserves was $3.1 billion, which is still only a small fraction of the total reserves of $146.5 billion, but it is already one of the highest levels in the world relative to the size of the country's economy.

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Increasing gold reserves and promoting stock investments are part of Michl's goals, as he hopes this will help the central bank to make profits and ultimately contribute to the national budget.

Over the past 25 years, the Czech koruna has appreciated by 48% against the euro, and the long-term appreciation has burdened the Czech central bank with a long string of accounting losses on its substantial foreign exchange reserves.

Michl began his six-year term as the governor of the Czech central bank in July 2022, setting a goal to increase the central bank's gold holdings to 100 tons, which would be about ten times the holdings two years ago.

In addition, he hopes to increase the proportion of stocks to 30% over the next five years.

"The central bank's strategy will be to buy gradually, and we will not try to time the market.

The same approach also applies to buying gold," he said.

Michl said in an interview in June that the change in balance sheet management methods should increase the expected average annual return on foreign exchange reserves from an earlier long-term average of about 2.6% to around 4%.

Gold is becoming increasingly popular in Central and Eastern Europe, with countries seeking to diversify their reserves, and some even considering gold as a way to protect their economies from geopolitical turmoil.

The Serbian central bank purchased 5 tons of gold last week, bringing its gold holdings to 46.5 tons, and Serbian President Vucic said this move strengthened the "financial security" of the Balkan nation.

Vucic said later on Monday evening, "We want to be safe and secure in difficult times, which is what I expect as the president of the republic."

Citigroup said that despite a recent decrease in purchases, central banks are unlikely to lose interest in gold.

Citigroup analysts expect central banks to set a record by purchasing about 1,100 tons of gold in 2024, a year-on-year increase of 5.8%.

The bank estimates that central bank gold demand fell by 63 tons to 227 tons in the second quarter from a historical high in the first quarter, but purchases in the third quarter may see a seasonal increase.

According to Citigroup's bullish scenario, central banks could even buy more than 1,250 tons of gold next year.

Since 2022, official sector gold demand has stabilized at a record level of 28-30% of gold mine production, and this figure could increase to 35% next year due to trade frictions and concerns about U.S. fiscal policy.