Market Report
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Central banks increasingly favour gold in their reserves
No. 22 | 22th June 2026
Gold has been a cornerstone of central bank reserves throughout history and for a lot of that time countries were on a gold standard. Although gold is no longer used to back money, central banks continue to hold gold reserves as a long-term store of value and inflation hedge, particularly for its performance in a crisis and as a diversifier.
Demand for gold from central banks remains strong despite higher gold prices. At the end of 2025, gold had overtaken US Treasuries as the most valuable reserve asset, having dropped below in 1996. This is a function of both the strong rally in gold prices increasing the value of existing reserves, and central banks being net purchasers since 2010. Central banks bought 863 tonnes of gold in 2025, and more than 1,000 tonnes annually from 2022 to 2024. According to the ECB, gold accounted for 27% of official reserve assets at the end of 2025, with US Treasuries at 22%.
Over the next 12 months, 45% of central banks expect their gold reserves to increase (source: World Gold Council Central Bank Gold Reserves Survey 2026), with only 1% expecting them to decrease. This is a slight increase from 43% in the 2025 survey but notably higher than 8% in 2019 and 20% in 2020. In the latest central bank survey, 75% of respondents that manage their gold reserves separately view their reserves as a strategic asset, whereas only 44% view them as a historical legacy asset. This has changed significantly from 2024, when 64% considered their gold reserves as a strategic asset and 62% viewed them as a historical legacy asset.
The appeal of gold comes from its high liquidity and the lack of counterparty. The majority of central bank reserves are held in the form of foreign currency and bonds. This allows for efficient payment for imports and servicing of external debt. While these assets, US Treasuries, Gilts, etc. are highly liquid, they hold some level of counterparty risk. This risk was highlighted in 2022 as the US and its allies froze Russian holdings of Treasuries and other offshore assets. Unlike these, gold, if stored domestically, has no counterparty, and there are always willing buyers. Jurisdiction is important here, if gold reserves are held overseas they could be frozen by the host country. In response to this there have been various instances of repatriation of gold reserves by India, Germany and, most recently, France.
Central banks’ gold reserves are useful in times of crisis such as a large oil shock. As seen this year with Turkey’s gold sales and swap lines, gold adds flexibility in a crisis. That gold reserves are liquid and universally recognised, along with attracting large demand from institutions and retail investors, allows them to be mobilised in times of crisis. Overall, the characteristics of gold and the demand for it make it an excellent reserve asset, so central bank demand is likely to continue to persist into the future.
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