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Central banks are accumulating bullion at the fastest pace in decades as geopolitical risks, de-dollarisation and inflation reshape the global financial order
Gold is steadily reclaiming its place at the heart of the global monetary system as central banks ramp up purchases of the precious metal amid rising geopolitical tensions, persistent inflation concerns and growing efforts to reduce dependence on the US dollar.
Official institutions now hold more than 36,000 tonnes of gold, the highest level since 1975, according to the World Gold Council (WGC). Over the past four years, central banks have purchased an average of 1,000 tonnes annually, nearly double the average pace of the previous decade.
The renewed demand is also changing the composition of global reserves. Data compiled by the Financial Times, based on the World Gold Council and the International Monetary Fund (IMF), shows that gold now accounts for nearly 25% of central bank reserve assets (excluding the United States), up sharply from around 10% between 2015 and 2020.
Historically, gold occupied a much larger share of reserve assets. Between the 1970s and the early 1990s, it represented 40 per cent to 60 per cent of official reserves, while before the collapse of the Bretton Woods system in 1971, gold-backed currencies made the metal the cornerstone of the international monetary system.
A structural shift in reserve management
The latest World Gold Council Central Banks Gold Reserves Survey 2026 suggests the buying spree is far from over. The survey found that 89 per cent of reserve managers expect global central bank gold holdings to continue rising over the next year, while a record 45 per cent plan to increase their own gold reserves during the period.
Nearly 83 per cent believe gold will account for a larger share of total reserves over the next five years, while 74 per cent expect the US dollar’s share of global reserves to decline. The findings point to a gradual but significant shift in how central banks view reserve assets.
Why central banks are buying more gold
The sharp increase in purchases gathered momentum after Russia’s invasion of Ukraine in 2022. Western sanctions froze hundreds of billions of dollars of Russia’s foreign exchange reserves, highlighting the vulnerability of reserve assets held within the global financial system.
For many central banks, physical gold offers an asset that carries no counterparty risk and cannot be frozen by foreign governments.
According to the WGC survey, 90 per cent of central banks cited gold’s performance during times of crisis as the primary reason for holding it. Other key factors included its role as a long-term store of value (84 per cent), portfolio diversification (82 per cent), and protection against geopolitical risks, particularly among emerging-market economies.
Countries including China, India, Turkey, Russia, and Kazakhstan have led the latest wave of official gold purchases.
Gold overtakes US government bonds
The changing preference is becoming increasingly visible in reserve portfolios. Research from the European Central Bank indicates that gold now accounts for roughly 27 per cent of official reserve assets, overtaking US Treasuries at around 22 per cent. The shift reflects both sustained central bank buying and the sharp rise in gold prices over the past two years.
Central banks are also changing where they store their bullion. The WGC survey found that a growing number of institutions are increasing domestic storage while diversifying overseas vaulting locations, reflecting heightened concerns over geopolitical uncertainty and financial sanctions.
The next monetary era
While the US dollar remains the world’s dominant reserve currency, economists say the composition of reserve portfolios is evolving. Rising sovereign debt, repeated episodes of quantitative easing, geopolitical fragmentation, and the weaponisation of financial sanctions have prompted central banks to seek assets that are independent of any country’s financial system.
Gold does not generate interest like government bonds, but its scarcity, liquidity and universal acceptance have strengthened its appeal as a reserve asset during periods of uncertainty.
Although gold’s share of official reserves remains below historical norms, the sustained pace of central bank buying suggests the metal is once again becoming a strategic pillar of the international monetary system.
If the current trend continues, gold could emerge as one of the biggest beneficiaries of the next phase of the global monetary order, as countries increasingly prioritise resilience, diversification and financial sovereignty over exclusive reliance on the US dollar.
