Why Do Central Banks Need So Much Gold?

09.03.2016

Updated: October 2026 · Average reading time — 5 minutes

When this article was first published in 2016, central banks had just bought about 590 tonnes of gold in a single year — the strongest buying in roughly half a century. At the time that looked like a record that would be hard to beat. A decade later, it looks like the beginning of a much bigger trend.

From sellers to the biggest buyers

For much of the 1990s and early 2000s, central banks in Europe were net sellers of gold, and many experts believed the metal had lost its place in the modern financial system. That changed after the 2008 financial crisis. Since 2010, central banks as a group have bought more gold than they sold every single year.

Buying then accelerated sharply. According to the World Gold Council, central banks purchased more than 1,000 tonnes of gold in each of 2022, 2023 and 2024 — the strongest three-year run in modern records. In 2025 net purchases slowed to about 863 tonnes as prices climbed to record highs, but that was still far above the 2010–2021 average of around 473 tonnes per year. Buying picked up again in 2026: in the second quarter alone, central banks added about 289 tonnes.

Who is buying?

In recent years, the most active buyers have been central banks of emerging and developing economies. In 2025 the largest buyers reported by the World Gold Council were:

the National Bank of Poland — about 102 tonnes, the biggest buyer for the second year in a row;
the National Bank of Kazakhstan — about 57 tonnes;
the Central Bank of Brazil — about 43 tonnes, returning to the market for the first time since 2021;
the State Oil Fund of Azerbaijan, the Central Bank of the Republic of Türkiye, the People's Bank of China and the Czech National Bank — each adding between about 20 and 40 tonnes.

In the second quarter of 2026, Poland again led (about 51 tonnes), followed by the People's Bank of China (about 33 tonnes).

Why central banks hold gold

Central banks manage national reserves — the savings a country keeps to defend its currency, pay for imports and respond to crises. Gold plays a special role in those reserves for several reasons.

1. No counterparty risk. A government bond is a promise by another government to pay. Gold held in a country's own vaults is not anyone else's liability, so it cannot default.

2. Protection against sanctions and frozen assets. After 2022, when a large part of Russia's foreign-currency reserves held abroad was frozen, many reserve managers began to pay closer attention to where and in what form their reserves are kept. Gold stored at home cannot be blocked by a foreign authority.

3. Diversification away from the US dollar. Most reserves are still held in dollars, but many countries want to reduce their dependence on a single currency. Gold is a neutral asset that is not issued by any state.

4. A hedge against inflation and crises. Over the long term, gold has kept its purchasing power far better than paper currencies, and it has tended to perform well during periods of financial stress.

5. Confidence. Large gold reserves signal financial strength to markets and to a country's own citizens.

What central banks say

The World Gold Council surveys reserve managers every year. In its 2025 survey, about 95% of responding central banks said they expected global central bank gold reserves to increase over the following 12 months, and more than 40% said they planned to increase their own gold holdings. The most frequently cited reasons were gold's performance during crises, its role as a long-term store of value and its usefulness for diversification.

Who holds the most gold?

The largest official gold reserves are still held by countries that accumulated them decades ago. The United States holds about 8,100 tonnes, Germany more than 3,300 tonnes, and Italy and France about 2,400 tonnes each. Russia and China each report more than 2,000 tonnes, and China has been one of the most consistent buyers over the past decade.

What it means for gold

Steady demand from central banks has become one of the main supports for the gold market. When the institutions responsible for a country's financial stability choose to hold more gold, it underlines the metal's role as a long-term store of value — the same role it has played for thousands of years.

Central bank buying can slow when prices rise quickly, as it did in 2025, and figures can change from quarter to quarter. Readers who follow the market should check the latest World Gold Council data before drawing conclusions.

A short history: gold in the monetary system

Gold's place in central bank vaults goes back to the gold standard of the 19th and early 20th centuries, when currencies could be exchanged for a fixed amount of gold. After the Second World War, the Bretton Woods system linked other currencies to the US dollar and the dollar to gold. That link ended in 1971, when the United States stopped converting dollars into gold for foreign governments. Since then gold has had no official monetary role, yet central banks still hold around a fifth of all the gold ever mined.

Frequently asked questions

How much gold did central banks buy in 2025?

According to the World Gold Council, central banks bought about 863 tonnes of gold in 2025, after more than 1,000 tonnes in each of 2022, 2023 and 2024.