Central Bank Gold Reserves: Has the Buying Frenzy Peaked?

Image: World official gold reserves as of June 2025

Executive Summary

• Central‑bank net purchases remain on a tear. After adding 1,037 tonnes (t) in 2024 - the third year above 1,000 t - monetary authorities bought another 244 t in Q1 2025, keeping demand well inside the range that has driven gold to new record highs.

• Diversification, sanctions‑insurance and de‑dollarisation keep trumping price. A fresh CentralBanking.com survey finds 71 % of reserve managers plan to raise gold allocations despite bullion trading near US $3,300/oz; only 2 % expect to cut.(cbsnews.com)

• The rush isn’t over-and private investors can follow suit. With gold now overtaking the euro as the second‑largest global reserve asset (≈20 % of total reserves), structural drivers point to continued official‑sector demand. Savers can “become their own central bank” by holding vaulted, spendable gold via Glint.

Historically, periods of sustained high gold purchases by central banks have often coincided with significant shifts in global economic stability or geopolitical tensions, such as during the Bretton Woods breakdown in the 1970s or the aftermath of the 2008 financial crisis. Today's heightened demand underscores similar anxieties, suggesting central banks view gold not merely as an asset, but as an essential hedge against systemic risks.

The $3,000 Question

When gold burst through US $3,400/oz this April, commentators asked whether the great central bank gold rush was running out of steam. Prices had doubled in five years and real yields were rising. Yet on the demand side the data tell a different story: official buying has merely paused for breath.

“If a central bank decides gold is strategic, price doesn’t matter; the horizon is decades.”

—       Jan Schmidt, Czech National Bank

A Quick Recap: Three Years Above 1,000 t

Sources: World Gold Council, IMF

This sustained surge almost doubles the average annual tally of the 2010s (≈510 t) and mirrors patterns observed during periods of significant monetary and geopolitical upheaval, such as the 1970s inflation crisis or the post-2008 global financial instability. Not since the height of the Cold War in the 1960s has sovereign wealth so aggressively moved into bullion, boosting global official gold reserves to 36,000 t, nearing historic peaks.(businessinsider.com)

2025 Has Started Strong

• Q1 net buying: 244 t - comfortably above the 10‑year quarterly average of 165 t.

• Top buyers: National Bank of Poland (57 t), People’s Bank of China (46 t), and the Reserve Bank of India (18 t).

• Sellers remain modest: Only the Czech National Bank (>4 t) and the Philippines (>3 t) trimmed holdings.

Four Forces Driving Central‑Bank Appetite

1. De‑Dollarisation & Geopolitics

Gold’s share of official reserves hit 20 % in 2024, edging out the euro (16 %).(businessinsider.com, thedeepdive.ca)

• Sanctions risk: The freezing of Russia’s FX assets in 2022 underscored the vulnerability of ledger‑money. Gold held at home is sanction‑proof.

• Currency bloc hedging: BRICS members openly discuss settling trade in local currencies; bullion provides a neutral bridge asset.

2. Diversification Without Drama

According to the 2025 Reserve Management Trends survey, two‑thirds of central banks cite portfolio diversification as the prime motive for buying gold - well ahead of any return objective.

3. Liquidity in a Crisis

Gold trading volumes in London and New York average US $150 bn per day, matching US Treasuries. During the 2023 US regional‑bank turmoil bid–ask spreads on bullion barely widened, reaffirming its usefulness as a back‑up FX‑intervention tool.

4. Inflation & Real‑Yield Uncertainty

Even with real yields positive, bullion’s inflation‑adjusted price only recently surpassed its 1980 peak. Macrotrends data show the real price is ~15 % above that level versus 90 % for nominal.(macrotrends.net)

Are Cracks Appearing?

While central banks continue their aggressive gold purchases, subtle shifts beneath the surface may signal broader economic and market implications ahead.

Logistics Bottlenecks

Last year’s 1,000‑tonne haul stretched London vault capacity, forcing shipments to the COMEX system in New York and increasing lease rates.

Emerging Sellers

Turkey flipped from buyer to seller in mid‑2024 to manage its domestic gold market, reminding investors that official flows can reverse. Yet its net sales (129 t) equated to barely 12 % of global purchases.

Higher Opportunity Cost

Fed funds above 4 % raise the carry cost of holding non‑yielding bullion. But history shows central‑bank demand is rate‑insensitive: purchases averaged 450 t/yr in the high‑yield 1990s versus almost zero net buying when rates were near zero (2001‑09).

Survey Says: Still Net Positive

Survey evidence on factors influencing the decision of central banks to hold gold

Concerns related to sanctions and the possible erosion of the role of major currencies were cited by some central banks in emerging and developing economies.

Sources: European Central Bank, World Gold Council and ECB staff calculations.
Note: This survey includes all 57 central banks holding gold in 2024, of which 18 are located in advanced economies and 39 in emerging and developing economies.

CentralBanking.com Survey 2025

Only 2 % of 83 responding institutions to a Central Banking Survey plan to reduce gold over the next year; 27 % will add “significantly”. Price is cited as a constraint by just 11 % of respondents.

Why the Rush Probably Isn’t Over

1. Reserve maths: At 20 % of reserves today, gold would need to reach 25 % to match the 1960s peak - implying an incremental 5,000 t at current FX‑reserve levels. This mirrors earlier periods of uncertainty, such as post-2008 when central banks increased reserves significantly, reflecting a historical pattern of strategic hedging.

2. Under‑weight EMs: Developing countries average <10 % of reserves in gold versus >60 % for the US and Germany. Catch‑up could add another 3,000 t over the decade.(discoveryalert.com.au)

3. Price‑invariant demand: Poland’s governor has stated the NBP will continue buying until holdings exceed 20 % of reserves, regardless of price.

4. Supply constraints: Annual mine output is ~3,500 t and flat since 2018. With recycling also muted, sustained 700‑1,000 t official buying absorbs 20‑30 % of total supply, tightening the market.

What It Means for Investors

BecomeYour Own Central Bank

If professional reserve managers treat gold as strategic, private savers can do the same - without worrying about warehouse receipts or geopolitical headlines. Download Glint now and put yourself on your own personal gold standard.

Tactical Windows

Sentiment gauges such as the Sprott Gold Bullion Indicator recently hit 92 /100, a level often followed by 10‑15 % pullbacks. Investors may consider phasing purchases or using price dips to add.

Portfolio Context

A 5‑10 % allocation to physical gold historically halves drawdowns in balanced portfolios during equity bear markets while lifting long‑term risk‑adjusted returns.

CTA: Ready to act? Buy gold with Glint - become your own central bank today.

.

Sources

1. World Gold Council, Gold Demand Trends - Full‑Year 2024: Central Banks.

2. World Gold Council, Gold Demand Trends Q1 2025.

3. CentralBanking.com, “Is the Central Bank Gold Rush Over?”, June 2025.

4. Business Insider, “Central banks just can’t get enough of gold”, 12 June 2025.(businessinsider.com)

5. European Central Bank, Annual Report on Reserve Management, May 2025 (via The Deep Dive).(thedeepdive.ca)

6. IMF COFER database, Q4 2024 update.

7. Macrotrends, Real Gold Price Series 1915‑2025.(macrotrends.net)

8. Narodowy Bank Polski, Reserve Assets release, 6 Sep 2024.

9. Discovery Alert, “Gold Reserves Central Banks 2025”, April 2025.(discoveryalert.com.au)

UK clients –

 “At Glint, we make every effort to demonstrate a balanced conversation between gold, silver, crypto and fiat currencies when it comes to purchasing power and, while we strongly believe that gold is the fairest and most reliable currency on the planet, we need to point out that it isn’t 100 % risk‑free. While we have seen a steady increase over time, the value of gold can fall, which means that its purchasing power can also decline.”

US clients –

 “Graphic representations of value are for illustrative purposes only. The Glint debit card is issued by Sutton Bank, member FDIC. The sale, purchase and storage of precious metals are offered by Glint and not Sutton Bank. Your investment in precious metals through Glint is

 • Not insured by the FDIC.

 • Not a deposit or other obligation of, or guaranteed by, Sutton Bank.

 • Subject to investment risks, including possible risk of loss of principal.

All investments involve risk, including possible loss of principal. The value of precious metals is affected by many economic factors, including but not limited to the current market price, demand, perceived scarcity and quality of the precious metal. Precious metals can increase or decrease in value. Past performance is not a guarantee of future results. As such, investing in precious metals may not be suitable for everyone.”