Central bank gold demand to surge as 89% expect global reserve growth: World Gold Council

The survey showed that strong gold demand from central banks is expected to continue in the coming period, as 45% of the respondent reserve managers said their institutions plan to grow their gold reserves within the next 12 months.

The percentage marked the highest level of purchasing intent that the survey recorded in its history, while only 1% of institutions expect to reduce their reserves.

Some 83% of participants expect gold’s share among total reserves to increase over the next five years. Last year, only 76% of participants expected the same.

Some 93% of respondents said they currently hold gold reserves, up from 81% last year, while 74% said they expect the US dollar’s share of global reserves to be below the current level in five years.

Respondents cited gold’s strong performance during crises among the reasons why central banks hold gold, with 90% of participants highlighting this feature, while 84% of respondents highlighted gold’s role as a long-term store of value and 82% cited its contribution to portfolio diversification.

Central banks, especially those in emerging markets, deemed gold’s potential to protect against geopolitical risks as a key factor.

Central banks are reportedly moving toward greater diversification where they store gold reserves, as 9% of participants said they have been increasing their domestic gold storage capacity over the past 12 months, while 10% reported they are diversifying their overseas storage locations.

The most preferred overseas storage center has been the Bank of England with a 57% share, while domestic storage followed with 49%.

Shaokai Fan, head of Asia-Pacific excluding China and global head of central banks at the World Gold Council, stated various economic and geopolitical factors helped shape the outlook, while the survey showed central banks continue to focus primarily on interest rates, geopolitical instability, and inflation concerns when making reserve-related decisions.

Fan noted reserve managers are increasingly seeing gold’s role as a hedge against geopolitical risks and its feature as a broader reserve diversification tool.

He said the survey’s findings reflected both cyclical and structural developments, as reserve managers are influenced by geopolitical tensions, economic uncertainty, and trade conflict concerns but the survey findings also showed a long-term trend towards greater diversification in reserve portfolios.

Fan stated that gold is not expected to fully replace the US dollar, but reserve managers aim to spread their assets across a broader range, and gold continues to benefit from these efforts due to its high liquidity and its inability to default.

He mentioned that central banks collectively bought an average of over 1,000 metric tons of gold per year in the past four years, much higher than the average of the previous 10 years.

He added that gold’s role as a strategic reserve asset in volatile and unpredictable global environments is steadily driving its demand in the coming period.