Why Central Banks Are Buying Gold Again

In the last days of February 2022, the Central Bank of Russia made an expensive discovery. Roughly $300 billion of its reserves, held as deposits and securities inside Western financial systems, stopped working. The G7 froze the assets within days of the invasion of Ukraine. The money still existed on paper; Russia simply could not touch it. The portion of the war chest that kept functioning was the part sitting in vaults in Moscow: about 2,300 tonnes of gold, plus reserves parked in China.

Every reserve manager on earth watched that happen and drew the same conclusion. A foreign currency reserve is not really yours. It is someone else's promise, and promises can be revoked on political grounds. Gold in your own vault contains no such clause. What has followed is the largest sustained official gold-buying wave in more than half a century, and it is quietly redrawing the balance sheet of the global monetary system.

1. From embarrassment to insurance

Central banks spent the 1990s and early 2000s treating gold as an heirloom to be discreetly sold off. The United Kingdom auctioned roughly half its holdings between 1999 and 2002 at an average price near $275 an ounce, a decision commemorated in trader slang as "Brown's bottom" after the chancellor who ordered it. So many central banks were selling that they signed an agreement in 1999 just to coordinate the disposals and stop crashing the price on each other.

The 2008 financial crisis ended the selling; central banks turned net buyers around 2010 and stayed that way at a moderate pace of a few hundred tonnes a year. Then came 2022. That year official purchases hit 1,136 tonnes, the largest on record, and stayed above 1,000 tonnes in each of the following two years. In 2025 the pace cooled to 863 tonnes, which still ran at nearly double the pre-2022 norm, and the World Gold Council expects another 700 to 900 tonnes in 2026. In its 2026 survey of reserve managers, a record 45 percent of central banks said they plan to increase their own gold holdings over the next year, and 89 percent expect global official holdings to keep rising. Not one said they plan to sell.

The timing is the tell. The buying did not accelerate when inflation returned or when deficits ballooned. It accelerated in the precise quarter that a major central bank's reserves were immobilised by its peers.

2. What gold does that a bond cannot

A US Treasury bond is a claim on someone: a promise by a government, settled through accounts that other governments supervise. Gold held at home is a claim on no one. It has no issuer to default, no custodian to comply with sanctions, no payment system to be excluded from. That is the entire product. In exchange, the holder gives up yield and pays for vaults, guards, and insurance. Reserve managers understand this trade perfectly well: they are paying a known premium for an asset whose value does not depend on anyone else's goodwill. It is insurance, priced accordingly.

Look at who is doing the buying and the logic sharpens. The heavy accumulators are almost all emerging market central banks: China, Turkey, India, Kazakhstan, and above all Poland, which added 102 tonnes in 2025 alone and now holds 550 tonnes, more than the United Kingdom keeps for itself. Poland's central bank governor has been explicit that the target, a fifth of reserves in gold, is about security in a dangerous neighbourhood. These are countries that either sit close to a conflict, trade with sanctioned economies, or can imagine a future disagreement with the issuers of the currencies they hold.

"A reserve currency is a promise. Gold is what central banks hold when they want one asset that promises nothing, and therefore cannot break its word."

Two details reinforce the point. First, a meaningful share of official buying is unreported at the time it happens; the World Gold Council's estimates routinely exceed what central banks declare to the IMF, which tells you the buyers see this as strategic rather than routine portfolio management. Second, storage has become part of the decision. Buying gold and leaving it in London or New York defeats the purpose, and a growing number of central banks have been repatriating metal to home vaults. The location of the bar is the policy.

3. The quiet demotion of the euro

In June 2025 the ECB published a statistic with a straight face that deserved a raised eyebrow: measured at market prices, gold had overtaken the euro as the world's second-largest reserve asset. Gold accounted for about 20 percent of global official reserves, against 16 percent for the euro and 46 percent for the dollar. Part of that is arithmetic, since a rising gold price inflates gold's share automatically. But central banks could have rebalanced by selling into the rally, as they did for two decades. They chose to keep buying instead. The price effect and the policy choice point the same way.

What this is not, at least so far, is the collapse of the dollar system that fills a certain genre of newsletter. The dollar still dominates trade invoicing, debt issuance, and crisis liquidity, and nothing else on offer can absorb reserves at that scale. Gold pays no interest and cannot be used to intervene in currency markets on a Tuesday afternoon. The honest reading is narrower and more interesting: central banks are not exiting the system, they are hedging it. They continue to hold the promises, while steadily enlarging the one asset that works if the promises fail.

The takeaway

Official gold buying is best read as a barometer of trust in the financial order, published in tonnes. On that reading, the world's central banks have been marking trust down for four consecutive years, through a war, a ceasefire, an election cycle, and a bull market. The open question is what would make them stop. A durable settlement in Europe? A framework that makes reserves legally untouchable? Nothing currently on the table does either. Until something does, the most informative number in the reserve statistics is not the dollar share. It is the weight of the metal, and the address of the vault.