According to the World Gold Council’s (WGC) latest Central Bank Gold Reserves Survey, official institutions have purchased an average of 1,000 tonnes of gold annually over the past four years—roughly double the average annual purchases recorded over the previous decade. The buying spree shows little sign of slowing, with 89% of surveyed central banks expecting global official gold reserves to increase over the next year, while 45% expect to add to their own holdings, a record high.
The findings underscore gold’s growing role as a strategic reserve asset at a time when the global economy is grappling with geopolitical conflicts, trade tensions and heightened financial market volatility.
Why are central banks buying more gold?
At the heart of the buying trend is diversification.
Central banks typically hold foreign exchange reserves comprising assets such as US Treasury securities, government bonds and foreign currencies to support their own currencies and maintain financial stability. Gold, however, occupies a unique position because it is a physical asset that carries no credit or counterparty risk and cannot be created at will like fiat currencies.
Unlike paper currencies, whose value can be eroded by inflation or expansionary monetary policies, gold’s supply is naturally constrained. That makes it an effective hedge against inflation and a store of value during periods of economic uncertainty.
The WGC survey found that reserve managers continue to rank gold’s performance during crises, portfolio diversification and inflation hedging among the primary reasons for increasing allocations. Many also cited geopolitical risks and concerns over sanctions as factors reinforcing gold’s importance within reserve portfolios.Another attraction is gold’s historical tendency to move independently—or even inversely—to the US dollar. Since the dollar still accounts for the largest share of global foreign exchange reserves, holding gold helps reduce concentration risk and cushions reserve portfolios during periods of dollar weakness or heightened market stress.
Why are countries bringing gold home?
The WGC survey also points to a gradual shift in where central banks choose to store their bullion.
While institutions such as the Bank of England and the Federal Reserve Bank of New York remain key global vaulting centres, an increasing number of central banks are opting to keep a larger portion of their reserves domestically.
Respondents reported storing at least some gold within their own country, up significantly from the previous year, reflecting a growing emphasis on direct control over strategic reserves amid geopolitical uncertainty.
A structural shift rather than a short-term trade
The renewed appetite for gold is widely viewed as a structural shift rather than a tactical investment.
Central bank purchases have remained elevated since 2022 despite record-high gold prices, suggesting reserve managers are prioritising long-term financial resilience over short-term price movements. Many expect gold to account for a larger share of global reserves over the coming years, while the share of the US dollar is seen gradually declining, according to the survey.
For policymakers, the rationale is straightforward: in an increasingly fragmented global economy marked by geopolitical conflicts, sanctions, volatile currencies and uncertain inflation, gold continues to offer qualities that few other reserve assets can match—liquidity, independence from any single sovereign issuer and the ability to preserve value across economic cycles.
