Why Do Central Banks Buy Gold?

How much gold are central banks purchasing?

Central bank gold purchases have been significantly elevated in recent years. In 2022, central banks set a 70 year record for gold purchases, snapping up 1,136 metric tons of gold. Buying was slightly lower in 2023 and 2024, clocking in at approximately 1,037 MT and 1,045 MT respectively.

2025 marked the first time in four years that buying fell below 1,000 MT, with central banks adding 863.3 MT of gold during the year. The drop off was attributed to a rapidly rising gold price, which repeatedly broke all-time highs and climbed above US$4,000 per ounce in Q4.

According to a World Gold Council survey of central banks conducted in H1 2025, a record 43 percent of all respondents expected their bank to increase gold reserves over the next 12 months, while 57 percent expected they would hold at current levels. Nearly half of respondents from emerging and developing economies expected to purchase gold.

As for 2026, central banks added just 5 MT of net gold to their coffers in January, well below the 27 MT average through 2025, as the gold price climbed to a peak of US$5,589.38 per ounce by the end of the month. Despite this, new buyers have emerged such as Bank Negara Malaysia, which added 3 MT of gold in its first purchase since 2018.

Why do central banks purchase gold?

Central banks serve a few primary functions, including setting interest rates, regulating monetary policy and controlling the printing and circulation of coins and bills.

However, their most important task is to provide price stability to their national currency while preventing banking system collapse. This is achieved through controlling inflation — although as the present global economic uncertainty has shown, sometimes the fate of a country’s currency may be difficult for a national bank to control.

This risk is part of the reason central bank gold buying has increased since 2010.

As the Dutch central bank notes, “A bar of gold always keeps its value. Crisis or not. That gives a safe feeling. The gold holdings of a central bank are therefore a beacon of confidence.”

Here are three primary uses of gold as the reserve commodity of choice for national banks.

Are central banks being priced out of the gold market?

Gold's price has increased dramatically since central banks became net buyers of gold in 2010. The price of an ounce of gold started that year around US$1,100, and by July 2020 it had topped US$2,000.

This pace has significantly escalated since 2024, and on January 28, 2026, gold passed US$5,500 to set a new all-time high of US$5,589.38 per ounce.

Higher gold prices haven't stopped the central banks of China, Russia, India or Turkey from growing their gold holdings. In fact, despite the record gains in the gold price in the last few years, these nations' central banks have been some of the world's biggest buyers of the precious metal.

Additionally, in its January 2026 report, the WGC noted that demand for gold has moved beyond these markets.

"The broadening of demand from central bankers might be an emerging key theme in 2026. As we have seen in January, both Malaysian and Korean central banks have resumed interest in increasing gold exposure after prolonged absences," it said.

Other central banks making significant increases to the gold holdings last year include Kazakhstan, picking 57 MT and Brazil which added 43 MT between September and November.

In addition, the National Bank of Poland emerged as 2025's top gold buyer, picking up 102 MT to bring its reserves to 550 MT. Bank Governor Adam Glapiński indicated the central bank wasn't done and expressed his desire to increase reserves to 700 MT for national security reasons.

Looking ahead, the WGC has no doubts that central banks will continue to be net purchasers in 2026, "as persistent economic and geopolitical uncertainty is likely to sustain demand for gold as a reserve asset."

The WCG noted that "geopolitical tensions, which have shown little sign of abating, are likely to keep accumulation going through 2026 and beyond."

Which central banks hold the most gold?

The US Federal Reserve tops the list of central banks by gold reserves by a wide margin with 8,133.46 metric tons of gold. Germany holds the world's second highest reserves, with 3,350.3 MT of the yellow metal.

The central banks of Italy, France and Russia take the third, fourth and fifth spots, holding 2,451.9 MT, 2,437 MT and 2,326.5 MT of gold, respectively.

China and Switzerland are in the sixth and seventh positions with 2,306.3 MT and 1,039.9 MT. Rounding out the top 10 gold reserves are the central banks in India (880.2 MT), Japan (846 MT), and Turkey (613.7 MT).

While it's not a country, the International Monetary Fund holds 2,814 MT in gold reserves, putting it just behind Germany.

Where do central banks store gold?

Most banks store gold in their subterranean vaults, although some keep their physical gold in foreign reserves.

For example, of its 612.45 MT, the Dutch central bank has 200 MT, or 31 percent, of its gold stock on hand. The remainder is split between foreign banks: 31 percent is held in New York’s Federal Reserve bank, and 38 percent is kept in a combination of the Bank of Canada and Bank of England vaults in Ottawa and London, respectively.