Why Central Banks Keep Buying Gold: The 2026 Thesis

Central banks have spent three years quietly rebuilding their gold

books. The World Gold Council's 2025 survey shows that the trend has not

just continued — it has deepened, with 95 percent of respondents

expecting global reserves to keep rising.¹

From Secondary Reserve to Core Allocation

Central banks have held gold on their balance sheets for as long as

there have been central banks. What is new is how central that holding

has become. Annual net purchases by monetary authorities averaged around

473 tonnes between 2010 and 2021.¹ In 2022 the figure leapt above 1,000

tonnes, and in the three years that followed it stayed at historically

unusual levels. Net 2024 purchases of 1,044 tonnes² and full-year 2025

buying of 863 tonnes¹ sit comfortably above the 2010-2021 average — and

the pattern looks structural rather than cyclical.

The World Bank frames the shift in share-of-demand terms. Central-bank

buying accounted for roughly 12 percent of total gold demand between

2015 and 2019; by 2024 the share had risen to almost 25 percent.³ In

other words, one ounce in every four purchased globally last year went

to an official-sector buyer.

The 2022 Inflection and the Russia Effect

Analysts point to a single moment as the accelerant: the freezing of

roughly US$300 billion in Russian reserves following the invasion of

Ukraine in early 2022. The event transformed gold's reserve-asset

narrative. For the first time in the post-Bretton Woods era, dollar

assets were not universally fungible. A risk that had been purely

theoretical for non-Western central banks became a concrete line in

their risk registers.⁴

What followed was not a shock rally but a slow, deliberate rebuilding of

gold positions — particularly across emerging markets. The logic is not

anti-dollar in the narrow sense. It is anti-concentration. Holding a

larger share of reserves in a politically neutral, historically durable

asset simply lowers the variance of an institution's balance sheet when

geopolitical relationships are volatile.

The mechanics of the shift also matter. Unlike the equity or bond

markets, the gold market absorbs official-sector flows with relatively

little frictional cost; a central bank that wants to buy 50 tonnes over

a year can do so without moving the price the way a similar-scale shift

into a non-dollar government-bond market would. That makes gold

unusually attractive as the marginal diversification tool even when its

returns are middling.

What the 2025 Survey Actually Said

The World Gold Council's Central Bank Gold Reserves Survey is the most

direct read on institutional intent. The 2025 edition found that 95

percent of participating central banks expect global reserves to

increase, and 43 percent plan to increase their own holdings over the

next twelve months.¹ Intent is sharply asymmetric by bloc: 48 percent of

emerging-market respondents signalled planned increases, against just 21

percent of advanced-economy respondents.

That split is more revealing than the headline number. The advanced

economies are not selling gold. They are standing pat. The marginal

buyer — the country most likely to shift allocations meaningfully in

2026 — is almost always in the emerging-market cohort. When the buyer

pool is structurally different from the seller pool, equilibrium tends

to drift, and that drift has been consistently upward for three years.

Where the Accumulation Is Happening

The national picture, as of mid-2025 data, backs up the survey. The

People's Bank of China reported holdings of 2,296 tonnes in May 2025

after seven consecutive months of additions. Russia's gold reserves

reached 2,329 tonnes in the same month, placing it fifth globally.⁵

Turkey, Poland and India have been the other loud buyers of the cycle.

None of these institutions publish complete real-time data, and some

purchases go through intermediaries before being reported to the IMF.

Official figures tend to lag. But the directional signal — more gold, by

more central banks, in more countries — is unambiguous. It also explains

why headline demand did not collapse even when 2025 buying came in below

the exceptional +1,000-tonne threshold of recent years.

The accumulation is also notable for what it does not include. Japan,

the euro area as a bloc and the United Kingdom have made no significant

additions to their gold reserves in this cycle; their existing holdings

are already enormous by weight but small as a share of total assets. The

gap between the old and the new official-sector behaviour is wide enough

that analysts increasingly model the two cohorts separately when

projecting flows.

Implications for Prices

The price record of 2025 was the mechanical result of the demand

structure. The LBMA PM gold price set 53 new all-time highs during the

year, and the annual average reached US$3,431 per troy ounce — up 44

percent year on year.² Global ETF inflows added a further 801 tonnes,

mostly from private-sector investors following the same macro logic as

the central banks.²

The World Bank projects that gold prices will remain more than 150

percent above their 2015-2019 average in both 2025 and 2026.³ Metals

Focus' open 2026 forecasts go further, pointing to an average gold price

around US$4,560 per ounce and a plausible path to US$5,000.⁶ Those

projections do not require central-bank demand to expand further — they

simply require it not to collapse. Given the survey results, that feels

like a low bar.

Risk-reward at the margin has also changed. Private investors who once

treated gold as an insurance sleeve are increasingly treating it as a

core allocation, partly because the official-sector presence has reduced

the tail-risk of a sustained sell-off. In a market where the largest,

most price-insensitive buyers are accumulating on schedule, the

probability distribution of returns shifts visibly to the right — and

positioning tends to follow.

Outlook

The 2026 thesis is not a bet on a new c