Globally, central banks’ annual acquisition of physical gold has risen above 1,000 metric tons for three straight years. Analysts are citing reasons that they don’t see this changing anytime soon.
Key Takeaways:
- For three years, central banks have purchased more than 1,000 metric tons of physical gold.
- Aggressive gold purchases by central banks are seen as motivated by a variety of economic factors, and this isn’t expected to change.
- Generally, banks have noted that “security” is the overwhelming reason for buying physical gold.
- Consumers are taking a cue from banks in their acquisition of physical gold as a stabilizing factor in individual portfolios—including through gold IRAs.
For centuries, gold has been a trusted store of value. While some might expect its role as a monetary asset to decline, central banks continue to prove otherwise. Recent data from the World Gold Council shows aggressive central bank gold purchases have led to historically high annual purchases, reinforcing gold’s importance as a reserve asset—and possibly for private investors as well.
Since the global financial crisis of 2008, central banks have been net gold buyers for 15 consecutive years. Demand surged in 2022, reaching all-time highs, with 2023 purchases nearly matching that record [1].
Analysts expected a slowdown in 2024, but it never came. Instead, central banks continued buying at unexpectedly high levels for the third year in a row, underscoring gold’s lasting role in global finance [1].
Central Bank Gold Demand Remains at Historic Highs
According to the World Gold Council, central bank gold demand in 2024 was just below 2023 levels, making it the third-highest year in history for central bank gold purchases [1].
2024 marked the third consecutive year annual central bank gold demand exceeded 1,000 metric tons [1].
In an era of economic uncertainty, this historic sustained demand sends a clear message about gold’s role in portfolio diversification. As we examine the latest trends, it’s worth considering what individual investors—particularly retirement savers—can learn from central banks’ continued accumulation of the world’s oldest asset.
Central Banks Shift to Gold as Dollar Concerns Grow
In the last year, gold hit new all-time highs 40 times, yet central banks continued aggressive buying. Demand for the year totaled 1,045 metric tons, close to the 1,080 metric tons in 2022 and 1,050 metric tons in 2023, marking a third consecutive year above 1,000 metric tons—a threshold analysts initially thought “unlikely” [2].
To put this surge in context, annual central bank gold demand from 2010 to 2021 averaged just 473 metric tons—less than half of recent totals [1]. The sharp acceleration since 2022 suggests more than just portfolio diversification; it signals a deliberate shift away from the U.S. dollar’s dominance in global reserves. Get more insight in Augusta’s full-length article (see link at bottom of this page).
For decades, the dollar has served as the world’s primary reserve currency, granting the U.S. significant power to enforce sanctions. About one-third of the world’s nations are currently under U.S. sanctions, fueling concerns over financial exposure to dollar-based reserves. Many point to 2022 as a turning point, when $300 billion of Russia’s foreign reserves were frozen following its invasion of Ukraine. That move underscored the risks of keeping reserves in assets controlled by Western powers.
Gold, a politically neutral asset with no counterparty risk, offers an alternative. While demand has surged among non-Western central banks, this trend extends beyond them. Poland, a close U.S. ally, was 2024’s largest central bank gold buyer, showing that the rush to gold is as much about economic security as it is about geopolitics.
Gold as a Shield: Poland and Eastern Europe Turn to Precious Metals
Poland’s central bank is not seeking to diversify away from the U.S. dollar, but rather to fortify its financial security amid economic and geopolitical instability.
As Adam Glapinski, governor of the National Bank of Poland, explained:
The purchases of gold conducted by NBP (National Bank of Poland) have not only increased the prestige of the Polish central bank, but also improved the financial security of Poland, which is particularly important in the face of the current tense geopolitical situation.[3]
Poland is not alone in this strategy. Hungary and the Czech Republic, also top gold buyers in 2024, share similar concerns.
Beyond geopolitics, macroeconomic factors also play a role. Central banks seek protection from inflation and market volatility, with gold serving as a stabilizing force.
With security and stability at the forefront, Poland and other nations continue to expand their gold reserves, reinforcing the metal’s role as a hedge against both geopolitical and economic uncertainty.
Why Are Central Banks Buying Gold?
According to the World Gold Council’s 2024 Central Bank Gold Reserves Survey, central banks cite three primary reasons for their continued gold accumulation:
- Long-term store of value / inflation hedge
- Performance during times of crisis
- Effective portfolio diversifier [5]
Simply put, central bankers are buying gold for the same safe-haven qualities that have made it a preferred asset for centuries. These factors have only become more relevant as global uncertainty persists.
This trend raises important questions about central bankers’ long-term economic outlook—and what it signals for investors navigating an increasingly volatile global economy.
Central Banks’ Gold Demand Shows No Signs of Slowing
For 15 consecutive years, central banks have been net buyers of gold, and according to the World Gold Council, their appetite “shows no sign of being quelled” [5].
This relentless demand is driven by persistent global uncertainty, with little indication that conditions will stabilize. The 2024 Gold Demand Trends report suggests that armed conflict evolving into economic and trade conflicts may further fuel central bank gold buying, possibly extending the 1,000+ metric ton trend into 2025 [5].
Gold prices have already reacted to shifting policies. Following new U.S. tariff announcements on February 1, gold climbed 3%, contributing to an 11% year-to-date gain. After President Trump’s first month in office, gold skyrocketed 10%.
Despite record-high gold prices, central banks appear unfazed. On February 7, Joe Cavatoni, senior market strategist at the World Gold Council, reaffirmed that central banks remain committed to gold accumulation.
With economic and geopolitical instability continuing to shape global markets, central banks are likely to maintain their aggressive gold-buying strategy well into 2025.
How Can You Add Gold to Your Retirement Savings?
For investors who believe central banks are onto something with their aggressive gold buying, acquiring physical gold and silver is more accessible than ever.
You don’t need to be a central bank to own precious metals safely and securely. Thanks to a 1997 federal tax code change, retirement savers can even purchase physical gold on a tax-advantaged basis through a gold IRA (consult a financial professional to understand how this could impact your portfolio).
That said, owning gold isn’t for everyone. Investors must decide whether diversifying with gold makes sense for their financial goals. However, with the same macroeconomic forces that fueled record-breaking central bank gold demand expected to continue, many experts—including those at the World Gold Council—believe central banks will keep accumulating.
Written by Isaac Nuriani
