Why Are Central Banks Buying 863 Tonnes of Gold?

Central banks bought more than 863 tonnes of gold in 2025 alone. The average from 2010 to 2021 was about 473 tonnes a year, so that's nearly double. On top of that, in a 2026 survey, 45% of central banks said they plan to add to their gold holdings within the next year. Gold pays no interest and no dividend, yet the largest players in the world keep stacking it. Why? Once you understand the reasoning, the character of gold as an asset comes into much sharper focus.

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For a central bank, gold is like an emergency fund

Start with why a central bank holds gold at all. A central bank guards a country's finances, so it keeps a reserve set aside for a crisis. That reserve is called foreign reserves.

Foreign reserves are usually filled with major currencies like the US dollar or the government bonds of those countries. But part of it is held in gold too. Gold isn't anyone's debt and isn't any company's promise — it's an asset recognized as valuable in its own right. The fact that no one has to pay you back is gold's defining feature.

So for a central bank, gold plays the role of an emergency fund — the thing you can lean on last. The expectation underneath is that even when other assets wobble, gold will hold its value.

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First, so they don't lean on one currency alone

The first reason central banks add gold is currency diversification.

Many countries hold a large share of their reserves in US dollars, because the dollar is the most widely used currency in the world. But lean too hard on a single currency, and the whole emergency fund shakes when that currency's value wobbles. It's all your eggs in one basket.

Gold isn't any particular country's currency. So mixing in some gold means that even when the dollar or another currency swings, the shock to the whole reserve is softened. For a central bank, gold is a way to spread the currency basket more evenly.

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Second, it holds value through turbulent times

The second reason is preparing for crisis and inflation.

In stretches when conflict or uncertainty grows around the world, it's hard to tell which asset is safe. In times like that, gold is seen as one that tends to hold its value — because it's been recognized as valuable for ages and its supply doesn't expand without limit.

Gold also draws attention when prices rise fast. When the value of money falls, gold, whose quantity doesn't grow easily, tends to hold its value by comparison. Recall that the number in your account and your real purchasing power are different things, and it gets clearer why gold draws attention in the face of inflation. So as uncertainty and inflation grow, central banks lean toward raising gold's share of their reserves. That mood sits behind the sharp jump in buying over recent years.

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Third, it doesn't depend on anyone

The third reason is independence — and it's the foundation under the other two.

Dollars and government bonds ultimately lean on a particular country's credit. You can't fully rule out that the country's situation deteriorates, or that the asset gets frozen for political reasons. In fact, some countries have raised their gold share precisely because they're aware their overseas assets could face restrictions.

Gold doesn't lean on anyone's promise. Stored physically in a vault, it becomes an asset that can't be tied up by any country's decision. Because of that independence, central banks keep gold closer in more uncertain times. An asset that can hold its value in your own hands no matter what happens — that's the deeper reason the big players keep stacking it.

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What this means for an individual investor

So what does central banks buying gold mean for an individual?

First, it helps you understand the character of gold as an asset. Gold pays no interest and no dividend. Held quietly, it generates no cash flow. The fact that central banks stack it anyway tells you the goal isn't to earn a return but to preserve value and spread risk. Gold is less an asset for growing money and more one for storing value.

That said, central banks buying it doesn't lead to a conclusion that individuals should buy along. Central banks and individuals differ completely in purpose, time horizon, and the risk they can bear. And gold doesn't only rise — it's an asset that swings hard. If you want to look closer at gold as an asset, the basics of investing in gold and silver help. Read central-bank moves as a clue for understanding "why gold is seen as a safe haven" — not as a signal to trade.

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The bottom line

Central banks buying more than 863 tonnes of gold a year isn't about chasing a return. It's the combined result of three reasons: currency diversification so they don't lean on one currency, preparation to hold value through crisis and inflation, and independence from anyone's promise. Gold pays no interest and no dividend, but it serves as an emergency fund because it's recognized as valuable in its own right and its supply doesn't grow easily. Knowing this shows you why gold is called a safe haven. But the big players' purpose differs from an individual's, so treat central-bank buying as a clue for reading gold's character, not a cue to buy along.

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• This information is not investment advice.
• Past performance does not guarantee future results.
• Backtest results are simulations and may differ from actual trading outcomes.