Central Banks' Gold Holdings Tipped To Rise, Says World Gold Council

A World Gold Council survey indicates that 95% of respondents expect central banks to increase gold reserves in the next year, a continuing rise in bullish sentiment from 81% last year, with 43% of central banks, particularly those in emerging markets, planning to increase their own holdings. The survey also showed that 72% believe the proportion of gold in central bank reserves will be moderately higher in five years, while active management of gold reserves has increased to 44%, primarily to enhance returns and manage risk; however, recent data shows a deceleration in the pace of monthly net buying, potentially due to high gold prices.

Analysis

A World Gold Council (WGC) survey highlights a significant and growing expectation among central banks to increase gold reserves, with 95% of respondents anticipating such a rise over the next 12 months, a notable increase from 81% in the previous year and 61% in 2022. Furthermore, 43% of the 72 surveyed central banks, an all-time high, plan to boost their own gold holdings within the same period, up from 29% last year, with this trend being particularly strong among emerging and developing market institutions (48%) compared to advanced economies (21%). Looking further ahead, 72% of respondents foresee the proportion of gold in central banks' total reserves being "moderately higher" in five years, an increase from 66% in 2024. The survey also indicates a rise in active management of gold reserves to 44% of respondents, up from 37%, driven primarily by enhancing returns (85%) and increasingly, risk management (22%). Key motivations for holding gold remain its performance in crises (85%), its role as a portfolio diversifier (81%), and its function as a long-term store of value (80%). Despite this strong sentiment, the WGC noted that recent high gold prices, which peaked above $3,500 per ounce during the survey period (25 February - 20 May) and currently stand at $3,396.60 (up 29% since early 2025), may have contributed to a deceleration in actual purchases, with net buying in April at 12 tonnes, down 12% from the previous month and marking the second consecutive month of slower accumulation. This price ascension has been fueled by concerns over trade tariffs, geopolitical instability, and US dollar weakness.

Key Decisions for Investors

• Given the strong and increasing conviction from central banks regarding gold accumulation, particularly as a strategic reserve and crisis hedge, investors should assess their long-term gold allocations, considering the metal's role in portfolio diversification and as a store of value.
• Investors should closely monitor central bank purchasing activity and gold price levels, as the recent slowdown in buying suggests potential near-term price sensitivity, even though the underlying strategic demand remains robust.
• The growing trend of active gold reserve management by central banks for return enhancement and risk mitigation could provide further support for gold and may present tactical opportunities for sophisticated investors.