Central banks buy gold as a reserve asset that carries no other country's credit risk and cannot be frozen by the issuer of another currency. Official-sector buying stepped up sharply after Russia's invasion of Ukraine in 2022, running above a thousand tonnes in each of 2022, 2023 and 2024 against an annual average of 473 tonnes over 2010 to 2021. The European Central Bank links the shift to sanctions risk and reserve diversification.
Gold is the only reserve asset a central bank can hold that is not somebody else's promise. A holding of United States Treasuries is a claim on the United States government; euro-denominated deposits are a claim on a European institution. Both depend on the issuer continuing to pay and continuing to permit access. Gold, once it is in a vault as identified bars, is simply there.
That distinction was largely theoretical for most of the post-war period. It stopped being theoretical in 2022.
What actually changed
Central banks were net sellers of gold for decades. They turned net buyers in 2010, and over 2010 to 2021 the World Gold Council records official-sector purchases averaging 473 tonnes a year. Then buying stepped up and stayed up: net purchases exceeded a thousand tonnes in 2022, again in 2023, and again in 2024, reaching 1,092.4 tonnes that year. In 2025 they came in at 863.3 tonnes, down 21 per cent on 2024 but still well above the norm before 2022.
The European Central Bank has been direct about the cause. In a June 2025 analysis it recorded that central bank gold demand "surged sharply in the wake of Russia's full-scale invasion of Ukraine in 2022 and has remained high", and put official-sector purchases at over 20 per cent of global gold demand in 2024 against roughly 10 per cent during the 2010s.
The mechanism it identifies is sanctions. The Bank found that one in four central banks in emerging and developing economies cited concerns about sanctions, or anticipated changes to the international monetary system, among their reasons for holding gold. It also noted a pattern running back much further: five of the ten largest annual increases in gold's share of a country's foreign reserves since 1999 coincided with that country facing sanctions in the same or the prior year.
By the Bank's reckoning, gold was the second-largest global reserve asset at market prices in 2024, behind only the United States dollar, and official holdings sit close to their Bretton Woods-era levels. Turkey, India and China together added more than 600 tonnes from the end of 2021.
Who has been buying
The buying is not concentrated in one place. On the World Gold Council's figures, the largest purchasers in 2025 were Poland at 102 tonnes, Kazakhstan at 57 tonnes - a record annual figure for that country - and Brazil at 43 tonnes, which had not bought since 2021. Azerbaijan added 38 tonnes across the first three quarters, and Turkey, China and the Czech Republic each added between 20 and 27 tonnes.
What the buyers have in common is less a region than a position: most are outside the group of countries that issue the world's main reserve currencies, and therefore hold reserves denominated in currencies they do not control.
The World Gold Council's 2026 survey of central banks, conducted anonymously between February and May 2026 with 76 respondents, found 45 per cent expecting their own gold holdings to rise over the following twelve months - the highest share in the survey's nine years - and 89 per cent expecting global central bank holdings to rise. Seventy-four per cent expected a moderate or significant fall in the United States dollar's share of global reserves over five years. Sanctioned central banks were excluded from the survey, so the figures describe the countries that are watching sanctions rather than experiencing them.
Gold is a small part of a large market
Official-sector demand is significant but it is not the largest component of gold demand. On the World Gold Council's full-year 2025 figures, total demand was 4,999.4 tonnes. The largest components were jewellery at 1,542.3 tonnes, bars and coins at 1,374.1 tonnes, central banks and other institutions at 863.3 tonnes, exchange-traded funds and similar products at 801.2 tonnes, and technology at 322.8 tonnes; those five leave a balance of about 96 tonnes, which sits in the Council's over-the-counter and other line. Mine production supplied 3,671.6 tonnes and recycling a further 1,404.3 tonnes.
That puts the official sector at a little over 17 per cent of total demand in 2025 - a calculation from those two figures rather than a published share. It is a large enough share to matter and small enough that describing central banks as the market would be wrong.
What holding gold actually involves
For a central bank, "holding gold" is a custody arrangement with specific legal properties, and the Reserve Bank of Australia publishes an unusually clear account of its own.
The Reserve Bank holds 80 tonnes, a figure unchanged since 1997. About 99.9 per cent of it sits at the Bank of England, with a minimal quantity at the Bank's Sydney head office; London was chosen because it is the largest gold trading centre. The holding is in an allocated account, meaning individual bars with specified serial numbers are attributable to the Reserve Bank, and the Bank of England acts as bailee while legal and beneficial title stays in Australia. That is materially different from an unallocated account, which is an entitlement to a quantity of gold from a pool and amounts to an unsecured claim on the institution holding it.
The gold is revalued daily and the resulting gains and losses go to an asset revaluation reserve rather than through the profit line. Since 2015, in line with International Monetary Fund guidelines, gold that has been lent out is excluded from reported physical holdings and recorded instead as forward currency inflows. The Reserve Bank has run a gold lending programme for more than thirty years, fully collateralised by cash or government guarantee, with interest paid in cash rather than in metal.
Verification is by sampling. The July 2025 audit examined 460 bars out of 6,372, or 7.22 per cent of holdings: 450 identified in advance and 10 chosen at random once the auditors were on site, with 60 of them ultrasound-tested and weighed. It confirmed holdings at 31 January 2025 of 2.6620 million fine troy ounces at the Bank of England and 0.0016 million at the Sydney holding point, 2.664 million in total.
Those two figures do not restate each other. The audit reports in fine troy ounces and publishes no tonnage conversion of its own; 2.664 million fine troy ounces is about 82.9 tonnes, against the 80-tonne figure the Bank uses in its standing description of the holding. Every bar must meet the London Bullion Market Association's Good Delivery standard, which specifies acceptable refiners, bar dimensions and assay, and imposes quality-assurance obligations on the refiners themselves. No discrepancies were found, and custody, segregation of duties and physical security at the Bank of England were assessed as appropriate. Earlier verifications were carried out in 2022, 2019 and 2013.
Where the metal physically sits
London's role is visible in the vault statistics the London Bullion Market Association publishes monthly, one month in arrears, on the fifth business day. At the end of July 2026 the London vaults held 9,534 tonnes of gold, roughly 762,723 bars, and 28,213 tonnes of silver. The gold figure includes the Bank of England's holdings; the silver does not, because the Bank of England holds no silver. Bar counts assume a standard 12.5 kilogram gold bar and a 30 kilogram silver bar, and the scope is holdings within the M25.
One city's vaults, in other words, hold about two and a half times the world's annual mine production - which is the practical reason a central bank on the other side of the world keeps its reserve there rather than at home.
Where to look next
- Gold in Australian dollars - the reference price page, and how an Australian dollar gold figure is derived.
- Silver in Australian dollars - the metal whose demand is majority-industrial, and why that makes it behave differently.
- Cash rate - the policy instrument a central bank uses far more often than its reserve composition.
Sources
- World Gold Council, Gold Demand Trends: Full Year 2025 (29 January 2026) and its central banks chapter - the 2025 demand composition, mine production and recycling totals; net official-sector purchases of 863.3 tonnes in 2025 and 1,092.4 tonnes in 2024; purchases above a thousand tonnes in 2022, 2023 and 2024; the 473-tonne average over 2010 to 2021; and the country-level purchases for Poland, Kazakhstan, Brazil, Azerbaijan, Turkey, China and the Czech Republic
- World Gold Council, Central Bank Gold Reserves Survey 2026 (16 June 2026) - fieldwork dates and the 76 anonymous respondents, the exclusion of sanctioned central banks, the 45 and 89 per cent expectations for rising holdings, the 74 per cent expecting a falling dollar share of reserves, and the storage-location shares
- European Central Bank, Gold demand: the role of the official sector and geopolitics (June 2025) - the post-2022 surge and its attribution, official-sector demand above 20 per cent of global demand in 2024 against roughly 10 per cent in the 2010s, the one-in-four sanctions finding, the relationship between sanctions and the ten largest reserve-share increases since 1999, gold as the second-largest reserve asset at market prices, and the Turkey, India and China total since end-2021
- Reserve Bank of Australia, Questions and Answers About Our Gold Holdings - the 80-tonne holding unchanged since 1997, the London storage share and the reason for it, the allocated-versus-unallocated distinction and the bailee relationship, daily revaluation into an asset revaluation reserve, the 2015 change to reporting loaned gold, and the terms of the lending programme
- Reserve Bank of Australia, Gold Verification Audit Report (July 2025) - the 460 bars from 6,372, the 7.22 per cent sample, the 450 pre-identified and 10 randomly selected bars, the 60 ultrasound tests, the fine troy ounce holdings at each location, the Good Delivery requirement, the audit findings, and the 2022, 2019 and 2013 predecessors
- London Bullion Market Association, London Vault Data - the end-July 2026 gold and silver tonnages and bar counts, the inclusion of Bank of England gold and the absence of Bank of England silver, the standard bar weights used in the count, the publication schedule, and the M25 scope
Not financial advice, and not a recommendation of any product or institution. Reviewed by the Tradergy editorial team, September 2026.
Common questions
Why do central banks buy gold?
Because it is a reserve asset that is nobody else's liability. A holding of foreign government bonds depends on that government paying, and can be immobilised by the country that issues the currency. Gold carries no counterparty and, once held domestically or with a trusted custodian, cannot be switched off. The European Central Bank found that one in four central banks in emerging and developing economies named sanctions concerns or expected changes to the international monetary system among their reasons.
How much gold do central banks buy each year?
Net official-sector purchases were 863.3 tonnes in 2025 and 1,092.4 tonnes in 2024, according to the World Gold Council. Purchases exceeded a thousand tonnes in each of 2022, 2023 and 2024. Over 2010 to 2021 the annual average was 473 tonnes, and central banks were net sellers before 2010.
Where do central banks keep their gold?
Frequently not at home. In the World Gold Council's 2026 survey of 76 central banks, 57 per cent reported storing gold at the Bank of England and 49 per cent domestically, with smaller shares at the Bank for International Settlements and the Swiss National Bank. The Reserve Bank of Australia keeps about 99.9 per cent of its holding in London, on the grounds that it is the largest gold trading centre.
What is allocated gold?
Gold held as specific, numbered bars attributable to the owner, with the custodian acting as bailee and legal title staying with the owner. It is distinct from an unallocated account, which is an entitlement to a quantity of gold from a pool and ranks as an unsecured claim on the institution holding it. Central banks that want gold to be free of counterparty risk hold it allocated.
How does anyone know the gold is really there?
By sampling and inspection. The Reserve Bank of Australia's July 2025 verification examined 460 bars, 7.22 per cent of its holding, of which 450 were pre-identified and 10 chosen at random on site, with 60 subjected to ultrasound testing and weighing. Every bar must meet the London Bullion Market Association's Good Delivery standard, which sets acceptable refiners and technical bar specifications.