Why Central Banks Are Buying Gold Like Never Before

Central banks around the world are buying gold at record rates, signaling a major shift in reserve management and global finance. This surge isn’t driven by nostalgia for the gold standard, but by strategic considerations in an increasingly volatile world.

Geopolitical tensions, unpredictable bond yields, and uneven economic growth have made traditional safe assets less reliable. In response, monetary authorities are turning to gold, which carries no counterparty risk, cannot default, and isn’t subject to sanctions or inflation in the way fiat currencies are.

Manoranjan Sharma, Chief Economist at Informerics Ratings, explains that this trend is part of a broader de-dollarisation strategy, particularly in emerging markets such as China, India, Russia, Turkey, and several Middle Eastern nations. “Gold strengthens monetary credibility, provides flexibility for independent monetary policy, and insulates against sanctions,” Sharma said. He also notes that gold protects against financial repression and the uncertainties of digital currencies, making this a deliberate structural move rather than a short-term hedge.

Central banks are projected to purchase approximately 900 tonnes of gold in 2025, marking the fourth consecutive year of above-average buying. The World Gold Council reports that 76% of central banks expect to increase gold holdings over the next five years, while 73% anticipate a decline in the US dollar’s share of global reserves.

China exemplifies this trend, with the People’s Bank of China buying gold consistently for 18 months until mid-2025. Analysts see Beijing’s purchases as both a hedge against potential US sanctions and a support for non-dollar trade within the BRICS+ bloc. This strategy has helped sustain elevated gold prices even when other buyers step back.

The impact of central bank buying goes beyond prices. Sharma highlights that official sector accumulation stabilizes the gold market, making it more resilient and less cyclical. With mine output growth limited and recycling constrained, sustained buying creates supply pressure, often widening premiums in key Asian markets like Shanghai and Mumbai.

Gold has already emerged as one of 2025’s standout assets, surging roughly 65% year-to-date and briefly crossing $4,000 per ounce in October. Analysts from Morgan Stanley and Goldman Sachs project that prices could rise further in 2026, with gold serving as both a hedge against fiat currency debasement and a strategic reserve asset.

This record buying underscores a paradigm shift: gold is no longer merely a hedge or luxury asset but a cornerstone of monetary sovereignty. In a world of geopolitical uncertainties, digital currency evolution, and declining trust in traditional fiat, gold is once again setting the standard for global financial security.