Over the past few years, central banks have been quietly accumulating large quantities of gold. The trend has accelerated sharply since Russia invaded Ukraine in 2022, pushing official-sector gold holdings to their highest level since 1975. Central banks now collectively hold more than 36,000 tonnes of the precious metal. According to the World Gold Council, central banks have bought an average of around 1,000 tonnes of gold a year over the past four years, roughly double the annual average of the previous decade. This strong official demand has been one of the factors behind gold's powerful price rally.
The appetite is not fading. In the World Gold Council's latest central bank survey, 89% of central bankers said they expect global official gold reserves to increase over the next 12 months. A record 45% said they expect their institution's gold reserves to rise over the same period. The renewed interest raises an important question: why are central banks once again placing so much value on physical bullion?
Central banks hold reserve assets as a form of national savings and financial insurance. These reserves can be used to support a country's currency, stabilize markets during periods of stress, or provide liquidity when borrowing from overseas becomes difficult or expensive. Reserve assets are usually held in foreign currencies and can include government bonds such as US Treasuries, bank deposits, foreign banknotes, and precious metals such as gold. For decades, US government debt has been regarded as one of the safest and most liquid assets in the world. But the composition of official reserves is changing. European Central Bank research shows that gold now accounts for about 27% of central bank reserves globally, compared with 22% for US Treasuries. Part of that shift reflects the rise in the gold price, but it also points to a deeper reassessment of risk.
The recent wave of gold buying has not been evenly spread across all countries. Since 2009, emerging markets and developing economies, including Russia, China, Turkey, India, and Kazakhstan, have largely concentrated their demand for gold. More recent data shows the same pattern continuing.
In May 2026, central banks reported net purchases of 41 tonnes of gold. Poland led the buying with 18 tonnes, followed by China with 10 tonnes. Uzbekistan bought 9 tonnes, and Kazakhstan added 7 tonnes. Singapore also returned to the market with a 4-tonne purchase—its first monthly net purchase since September 2025. Poland has been the standout buyer so far in 2026, accumulating 64 tons year-to-date. The country now holds 614 tonnes of gold and is moving closer to its stated target of 700 tonnes. Uzbekistan follows with 33 tonnes bought this year, while China has added 25 tonnes and Kazakhstan 20 tonnes. China's central bank has now bought gold for 20 consecutive months. Its official gold reserves stand at about 2,331 tonnes, or roughly 9% of total reserves. Kazakhstan's gold holdings stand at 361 tonnes, representing about 78% of its reserves, while Uzbekistan's gold reserves account for an even larger 87% of its total reserves.
There have also been sellers. Russia sold 6 tonnes in May and has sold 34 tonnes so far this year, reducing its total holdings to 2,292 tonnes. Turkey sold 3 tonnes in May and has sold 81 tonnes year-to-date.
The traditional case for gold remains powerful. Central banks value it because it tends to perform well during periods of crisis. In the World Gold Council's yearly survey, 90% of central banks said they held gold because it does well in times of stress.
Gold is also viewed as a long-term store of value, particularly during periods of high inflation. Gold, unlike a bond or bank deposit, is an asset, not a liability. It does not depend on a borrower's ability to repay, and a central bank cannot create it in the same way as fiat currency. Another reason is diversification. By holding a mix of assets across currencies, jurisdictions, and instruments, central banks can reduce their exposure to any single country or financial system. A more recent and increasingly important reason is protection against financial sanctions. Governments use financial sanctions to restrict a country's access to money, financial services, or global markets. They can include freezing assets, limiting access to payment systems, or prohibiting transactions with certain institutions.
The growing use of sanctions by the United States, the European Union, and other governments has encouraged some countries to reduce their reliance on dollar-based assets and Western financial infrastructure. Russia is the clearest example. After Russia annexed Crimea in 2014, Western sanctions prompted its central bank to accelerate gold purchases. From 2014 onward, for several years, Russia was the world's largest gold buyer.
The sanctions imposed after Russia's full-scale invasion of Ukraine in 2022 intensified concerns among other emerging economies. Russia was excluded from the SWIFT international payments system, and around US$300 billion of its central bank foreign assets were frozen. For many countries, the situation was a clear indication that foreign reserves held in another jurisdiction may not always be accessible in a geopolitical crisis. Gold, especially when stored domestically, offers a way to hold reserves outside the reach of foreign governments. This is one reason why China, Turkey, India, and others have continued to build gold reserves. The World Gold Council's latest survey supports this view. About 37% of emerging market and developing economy central banks cited "concerns about sanctions" or the "anticipation of changes in the international monetary system" as factors behind their decision to hold gold.
The renewed interest in gold is part of a broader effort by some countries to reduce dependence on the US dollar. The dollar remains the dominant global reserve currency, but central banks are increasingly seeking alternatives that can provide stability without the same geopolitical exposure.
Gold is attractive in this context because it is universally recognized, highly liquid, and independent of any single government. It can be held physically and, unlike foreign bonds, cannot be frozen as easily if stored in a central bank's own vaults. Still, the shift should not be overstated. Gold remains only one part of global reserves, and for many emerging and developing economies, it is still a relatively small share of total holdings. The dollar-based system remains deeply entrenched, and US Treasuries continue to play a central role in global finance. Most central banks still buy gold through the over-the-counter market, which remains the dominant channel for official-sector purchases. However, some are exploring other methods.
The Bank of Korea has reportedly completed preparations to invest in overseas gold-backed exchange-traded funds as part of a strategy to diversify its foreign currency assets. The bank currently holds 104 tonnes of gold, which is about 3% of its total reserves — relatively low compared with many emerging market peers.
Gold-backed ETFs offer high liquidity and lower storage costs, but they remain uncommon among central banks. Only about 4% of central banks surveyed by the World Gold Council said they purchase gold through gold-backed ETFs. Singapore is also positioning itself more actively in the gold market. The Monetary Authority of Singapore bought 4 tonnes in May 2026, bringing its total holdings to 197 tonnes. Separately, Singapore plans to establish central bank gold-vaulting services in October 2026 as part of its ambition to become a gold hub.
Gold buying has also begun to appear among some Latin American central banks. In 2026, Chile accumulated around 8 tonnes of gold, while Guatemala added 2 tonnes. Bolivia and Uruguay each bought about 1 tonne. It is too early to say whether this trend will become a broader regional trend, but it suggests that interest in gold is spreading beyond the usual group of large emerging-market buyers.
The renewed enthusiasm for gold contrasts sharply with the mood of the 1990s, when many central banks were selling. At the time, many people regarded gold as a relic of the past. In 1997, Australia's then treasurer Peter Costello said gold "no longer plays a significant role in the international financial system." The Reserve Bank of Australia sold 247 tonnes of gold when the price was below US$400 an ounce. The sale was worth around A$4 billion at the time; today, that gold would be worth vastly more.
The United Kingdom made an even more famous sale. Between 1999 and 2002, then-Chancellor Gordon Brown authorized the sale of 395 tonnes of the UK's gold reserves at an average price of US$275 an ounce, near a 20-year low. The episode became known as "Brown's bottom."
With hindsight, those sales look poorly timed. But they reflected the prevailing belief of the era: that gold had lost its monetary relevance in a world of floating exchange rates, deep bond markets, and low inflation. That view has changed.
Central bank gold holdings are now near levels last seen around the end of the Bretton Woods system, when the US dollar was still linked to gold. But this does not mean the world is returning to a gold standard. Gold is unlikely to regain its pre-1970s role, when major currencies were tied to the metal. Modern financial systems are far too large, complex, and credit-driven for gold to function as the anchor it once was.
What has returned is gold's role as insurance. Central banks seek assets that are liquid, durable, and free from another country's control in an environment marked by geopolitical tension, inflation uncertainty, sanctions risk, and questions about the future of the international monetary system. That explains why gold is back at the center of reserve management. It may no longer define the global monetary system, but for central banks navigating an increasingly uncertain world, it has become too important to ignore.
