Central bank gold buying to continue amid global uncertainty

Khaleej Times

12 hours ago

As the world becomes increasingly volatile and unpredictable, gold's safety, liquidity and return characteristics – the three key investment objectives for central banks – have risen in importance. Central banks continue to recognise the benefits of an allocation to gold, and indicate that their demand for gold will likely remain healthy for the foreseeable future.
The World Gold Council's 2025 Central Bank Gold Reserves (CBGR) survey, conducted between February 25 and May 20, helps shine a light on the continued importance of gold reserve management in these challenging times.
Central banks have accumulated over 1,000 tonnes of gold in each of the last three years, up significantly from the 400-500 tonne average over the preceding decade. This marked acceleration in the pace of accumulation has occurred against a backdrop of geopolitical and economic uncertainty, which has clouded the outlook for reserve managers and investors alike.
Central banks see gold making up a growing share of their reserve portfolios. Seventy six of respondents believe that gold will hold a (moderately or significantly) higher share of total reserves five years from now, up from 69 per cent last year. Responses were also fairly consistent between central banks in advanced economies and EMDE (emerging markets and developing
economies), with the majority anticipating that the proportion of gold held as total reserves would be moderately higher in five years.
Respondents were less sanguine on the US dollar. While it maintains its position as the dominant global reserve currency, data from the IMF's Currency Composition of Official Foreign Exchange Reserves (COFER) shows that its share has been on a gradual decline. And respondents believe that this trend will continue, with 73% expecting its share to be lower five years from now. Both advanced economy and EMDE responses were aligned in this view.
A record 95 per cent of respondents believe that official gold reserves will continue to increase, up from 81 per cent last year. 'This sentiment was again consistent across both advanced economy and EMDE respondents. This finding is particularly notable given the colossal gold accumulation among central banks over recent years,' the global body said in a statement.
In addition, 43 per cent of respondents also thought that their own institution's gold reserves would rise over the next year, up from 29 per cent in 2024 and marking a new record high. 'But here we see a divergence in responses, with EMDE banks more inclined to add gold than their advanced economy counterparts. Nearly half of EMDE respondents thought that their own gold reserves would increase in the next 12 months, notably more than advanced economy respondents,' the WGC said.
Taken together, these findings clearly highlight that gold sentiment within the central banking community remains positive. Expectations point to continued gold buying over the next 12 months, reflecting sustained confidence in gold's strategic role amid evolving geopolitical and macroeconomic dynamics.
Central banks increasingly view gold as an important strategic asset within their reserve portfolios. Ongoing economic and geopolitical uncertainty continues to weigh on reserve managers, as this year's findings highlight.
Concerns over the inflation outlook and potential trade conflicts, particularly amongst EMDE banks, show that diversification and risk mitigation continue to be key drivers of strategic reserve management decisions. And while there are divergences between advanced economy and EMDE central banks on some aspects, they share a common confidence in gold's role as a reliable store of wealth and a key component of long-term reserve management strategies, the WGC noted.