Central banks around the world purchased over 1,100 tonnes of gold in the past year, marking the third consecutive year of exceptional buying. This sustained accumulation trend represents a fundamental shift in how the world’s monetary authorities view gold in their reserve portfolios.
Who Is Buying?
The People’s Bank of China has been the most prominent buyer, adding to its reserves for 18 consecutive months. China’s official gold reserves now exceed 2,300 tonnes, though analysts believe actual holdings may be significantly higher.
Other major buyers include the Reserve Bank of India, the Central Bank of Turkey, and several Eastern European central banks including Poland and the Czech Republic. These institutions are diversifying away from U.S. dollar-denominated assets.
Why Are Central Banks Buying?
The weaponization of the dollar-based financial system — particularly the freezing of Russian foreign exchange reserves in 2022 — has accelerated de-dollarization efforts. Gold, as a neutral reserve asset with no counterparty risk, has emerged as the preferred alternative.
Rising U.S. government debt levels, now exceeding $34 trillion, have also raised concerns about the long-term purchasing power of the dollar. Central banks are hedging against potential dollar depreciation by increasing gold allocations.
Market Impact
Central bank buying has effectively put a floor under gold prices, absorbing significant supply and reducing the metal available for private investment. This structural demand shift is one of the most important factors supporting the current gold bull market.
Analysts expect central bank gold purchases to remain elevated for the foreseeable future, providing a sustained tailwind for prices.