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Central banks around the world are expected to continue increasing their gold reserves, extending a trend that has already seen record levels of bullion buying over the past three years.
By Ryan Chigoche
According to the World Gold Council’s (WGC) latest Central Bank Gold Survey, 95% of the 73 central banks that participated believe global gold reserves will grow over the next 12 months.
Notably, 43% said they expect their own holdings to increase — the highest proportion recorded since the survey began and up significantly from 29% in 2024.
Last year marked the third-largest annual increase in central bank gold reserves on record, with net purchases reaching 1,129.8 tonnes.
That figure was just 6.2 tonnes below 2023 levels and only 91 tonnes short of the all-time high of 1,136 tonnes set in 2022 — the largest annual total since at least 1950.
To put that in context, central bank gold purchases averaged just 473 tonnes annually between 2010 and 2021.
The current buying streak has now extended into its 16th consecutive year.
The WGC noted that the rise in survey participation is not merely statistical but “a powerful signal of engagement with gold amongst the central banking community.” Seventy-six percent of respondents said they expect gold to hold a moderately or significantly higher share of total reserves over the next five years, up from 69% in last year’s survey.
“Expectations point to continued gold buying over the next 12 months, reflecting sustained confidence in gold’s strategic role amid evolving geopolitical and macroeconomic dynamics,” the WGC stated.
Declining Role of the Dollar
While gold’s share of global reserves has been rising, the U.S. dollar’s role has been slipping.
IMF data shows the dollar accounted for 57.8% of global reserves at the end of 2024 — its lowest level since 1994 and a 7.3 percentage point decline over the past decade. In 2002, the dollar made up roughly 72% of reserves.
WGC survey data suggests this trend is likely to continue. About 73% of central banks said they expect their dollar reserves to fall further over the next five years. The euro’s share of global reserves has remained relatively steady, meaning that gold — rather than the euro — has taken up the space left by the dollar’s decline.
Analysts have pointed to concerns about sanctions and the politicisation of major reserve currencies as reasons for the shift. As CNBC noted, gold is increasingly attractive to countries looking to shield themselves from the potential erosion of traditional monetary systems.
Why Gold?
The WGC survey found that interest rates are the most important factor influencing reserve management decisions. Inflation was cited as the second most important. Among emerging markets and developing economies (EMDEs), inflation and geopolitical risks were tied as the top reasons for buying gold, each cited by 84% of respondents.
When asked to rank the relevance of various factors in their gold allocation decisions, central banks pointed to gold’s historical performance during crises and its function as an inflation hedge as the most compelling attributes.
As the WGC concluded, “Gold’s safety, liquidity and return characteristics — the three key investment objectives for central banks — have risen in importance.” The Council added that demand for gold is expected to “remain healthy for the foreseeable future” as diversification and risk management become central to reserve policy.
