Central banks around the world continue to show interest in increasing their gold reserves despite the recent decline in bullion prices. According to Bloomberg, this demand remains one of the key forces that has supported gold’s historic rally in recent years.
According to a survey by the World Gold Council and YouGov, 45% of the 74 central banks polled said they plan to increase their gold holdings over the next year. This is the highest share since the organization began collecting such data in 2018. At the same time, only one central bank said it intended to reduce its gold reserves.
Gold prices have more than doubled over the past three years. One of the main drivers of this rise has been active buying by central banks, especially in emerging-market economies. However, some of those gains have been erased this year. The conflict in the Middle East has pushed energy prices higher and strengthened expectations that interest rates may remain elevated for longer. That has reduced the appeal of gold, which does not generate interest income.
Against this backdrop, speculative investors have begun to leave the trade, and gold prices recently fell to their lowest levels since November. For central banks, however, the decline in prices may instead become a reason to resume or expand purchases.
Shaokai Fan, global head of central banks at the World Gold Council, said that the fall in gold prices could be seen by some monetary authorities as an opportunity to enter the market. According to him, in 2025 some central banks considered gold too expensive and preferred to wait for a more attractive buying opportunity.
Central bank gold purchases accelerated in the first quarter, even though several countries, including Turkey, Russia and Azerbaijan, started selling part of their holdings. According to the survey, most of the expected demand over the coming year is likely to come from emerging and developing economies. Among central banks in these countries, 53% expect their gold reserves to increase. By comparison, only 18% of central banks in advanced economies gave the same answer.
An important feature of current demand is that many countries are buying gold not on the international market using hard currency, but through domestic accumulation programs. Under such schemes, the state buys gold from national mining companies in local currency. This allows countries to increase their reserves without using scarce foreign-exchange assets. Half of the central banks planning to buy gold said they would use this mechanism. Another 38% said they would finance purchases by selling existing reserve assets.
Central banks are also paying closer attention to where their gold is stored. The Bank of England, located in London, the world’s largest physical gold trading hub, remains the most popular storage location: 57% of respondents said they use it. At the same time, there is a growing desire for geographical diversification. Over the past year, 9% of respondents increased the amount of gold stored within their own borders, while 10% moved to diversify their holdings across different locations. A year earlier, those figures stood at 5% and 2%, respectively.
This trend reflects the growing importance of political risk. According to Shaokai Fan, such risks are increasingly on the minds of central banks when they make decisions. This could create new opportunities for alternative gold-storage hubs, including Singapore and Hong Kong, which are seeking to strengthen their positions in the global bullion market.
Overall, the World Gold Council’s data show that central banks’ interest in gold has not disappeared even after the correction in prices. On the contrary, for some monetary authorities, lower prices may provide a convenient moment to increase reserves. This means that one of the most important sources of demand that has supported the gold market in recent years remains firmly in place.
This article was prepared based on materials published by Bloomberg. The author does not claim authorship of the original text but presents their interpretation of the content for informational purposes.
The original article can be found at the following link: Bloomberg.
All rights to the original text belong to Bloomberg.
