Central banks globally have accumulated the highest quantity of gold since 1975, with official reserves now exceeding 36,000 tonnes. This represents a 50-year peak in gold holdings, according to data from the World Gold Council.
Record Central Bank Gold Purchases Since 2022
Central bank buying of gold accelerated sharply after Russia's invasion of Ukraine in February 2022. The World Gold Council reports that central banks have purchased an average of 1,000 tonnes of gold annually over the past four years — double the average annual purchases of the previous decade. This sustained demand has been a key factor behind the surge in the gold price in 2025. The council's latest survey also found a record 45% of central banks intend to increase their gold holdings over the next year.
Why Central Banks Hold Reserve Assets
Central banks maintain reserves as a form of savings to intervene in financial markets, support their currency, or manage market stress. These reserves help absorb pressure during currency crises — for instance, when the Australian dollar plunged to a record low of 47.75 US cents in April 2001 — or when overseas borrowing becomes difficult or expensive. Reserve assets are held in foreign currencies and typically include government debt (such as US Treasuries), deposits, banknotes, and precious metals like gold.
Emerging Markets Lead the Gold Buying Spree
The strong demand for gold has not been universal. Since 2009, purchases have been concentrated among emerging markets and developing economies, led by Russia, China, Turkey, India, and Kazakhstan. The World Gold Council's annual central bank survey identifies three main reasons: gold's strong performance during crises, its role as a long-term store of value amid high inflation, and portfolio diversification to reduce risk.
Sanctions Shield: A Key Driver
An increasingly important factor is gold's ability to protect against financial sanctions imposed by foreign governments. Financial sanctions restrict a country's access to money, financial services, or global markets. Research indicates that the growing use of financial sanctions by the United States, the European Union, and others has accelerated gold purchases by emerging market economies. After Russia annexed Crimea in 2014, the Russian central bank ramped up gold buying and has since purchased more gold than any other nation. Following Russia's exclusion from the SWIFT payments system in 2022 and the freezing of about US$300 billion of its central bank's foreign assets, several emerging market and developing economies — particularly China, Turkey, and India — further increased their gold reserves. The World Gold Council's survey shows that around 37% of central banks in emerging markets and developing economies cited “concerns about sanctions” or “anticipation of changes in the international monetary system” as reasons for holding gold.
Gold Now Exceeds US Treasuries in Central Bank Reserves
European Central Bank research reveals that central bank gold reserves now account for 27% of total official reserves, surpassing holdings of US Treasuries at 22%. US Treasuries have traditionally been considered one of the safest assets. Part of this shift is driven by the surge in the gold price. However, despite the move away from dependence on the US dollar, gold remains a small portion of total official reserves, particularly for emerging and developing economies.
Historical Context: From Bretton Woods to Brown's Bottom
Current gold holdings approach levels seen near the end of the Bretton Woods system in 1971, when the US dollar was pegged to gold. By the 1990s, many central banks sold off significant gold holdings. In 1997, Australian Treasurer Peter Costello stated that "gold no longer plays a significant role in the international financial system." The Reserve Bank of Australia subsequently sold 247 tonnes of gold when the price was below US$400 per ounce. The sale, worth about A$4 billion (US$2.8 billion) at the time, would be worth approximately A$49 billion today. An even more notable sale was "Brown's bottom": between 1999 and 2002, UK Chancellor Gordon Brown authorized the sale of 395 tonnes of gold at an average price of US$275 per ounce — a 20-year low. With hindsight, both decisions appear ill-timed.
Outlook: Gold's Role in Uncertain Times
As long as economic uncertainty and geopolitical risks remain elevated, central banks will continue to hold gold. However, gold is unlikely to return to its former prominence when major currencies were linked to the gold standard. The current trend reflects a strategic diversification away from dollar-denominated assets, driven by sanctions concerns and a search for safe-haven stores of value.
