Gold Demand Surging At Central Banks

The market price of spot gold has been softening all year since the 28 January 2026 all time high of USD 5,589 per ounce, but lower prices seem to spur central banks to even more buying. In September alone People’s Bank of China added 740,000 Troy ounces to gold reserves (23 metric tonnes) as spot gold weakened further toward USD 4,100. Foreign exchange reserves fell over the same month. This was the largest single month of gold buying in 23 months since PBoC resumed gold purchases.

The outsize buying in September puts China first in 2026 global gold buyers at 101 tonnes, easing past Central Bank of Poland which has bought 98 tonnes. Central Bank of Uzbekistan followed China as the third largest buyer at nearly 50 tonnes, taking gold to a massive 90% of total reserves. The average proportion of gold in reserves is 27%. 

China’s aggressive import of gold reserves aims to correct the imbalance of earlier policy which sold Chinese gold production in global markets to accumulate FX reserves. Even following 15 years of gold accumulation, gold is still a low 8.8% of total PBoC reserves.

This week Russia’s Finance Ministry announced it will surge monthly purchases of both FX and gold fivefold from October 7 to November 6 to 279.42 billion rubles (USD 3.26 billion). Russia reports only aggregated FX and gold reserves, withholding the split, but as Russia is barred by sanctions from Western reserve currencies, presumably much of the present accumulation is in gold for self-custody. At current spot prices $3.26 billion would buy 27 metric tonnes of gold. 

Central Bank of South Korea bought gold for the first time since 2013 under new Governor Hyun Sun Shin. More surprising, the German Bundesbank indicated it may buy gold for the first time since 1968! Another signal, Central Bank of Turkiye has reversed a sharp selloff of gold early in the year and returned to buying.

The World Gold Council forecasts full-year 2026 central bank gold buying of 850 tonnes, following record net purchases of 289 tonnes in Q2 2026. In the most recent World Gold Council Central Bank Gold Reserves Survey 2026 a record 45% of reserve managers plan to increase gold reserves within a year, 84% expect to increase gold holdings over 5 years.

While fear of dollar weaponisation and de-dollarisation policies generally motivate the shift to gold reserves, there is also empirical evidence of immediate, significant benefits. Indian Institute of Management Ahmedabad (IIMA) has confirmed a direct link between gold reserves and lower Credit Default Swap spreads, reducing sovereign borrowing costs in bond markets. The effect is particularly noticeable when credit markets are stressed or in crisis. Gold reserves reduce perceptions of external or FX vulnerability and seem to backstop sovereign bond market confidence as the ultimate collateral.

China and Russia are the top gold producers in the world, but both still buy gold reserves for import in global markets. Buying gold domestically can trigger quasi-fiscal or monetary expansion, risking inflation or exchange rate volatility. Buying imported gold in global markets avoids these unwelcome risks.

Even smaller, poorer countries can benefit from steady gold reserves accumulation. In 2024 Zimbabwe introduced the ZiG, a parallel currency backed explicitly by disclosed FX and gold reserves, a quasi-multi-asset currency board restraining ZiG money supply. Since launch the ZiG has become the official currency (ISO code ZWG). In March 2024 inflation was over 55% year on year; by August 2026 inflation had fallen to a record low 2.9%, below US inflation! While Zimbabwe is still synonymous to some with hyperinflation, ZiG has contributed to renewed investor confidence. According to UNCTAD World Investment Report 2026 FDI inflows rose sharply to $965 million in 2025, supporting expansion of mining and energy projects. GDP growth is now a healthy 5%, prompting the World Bank to remove Zimbabwe from the list of ‘fragile or conflict-affected economies’.

Not everyone is enthusiastic about increasing gold reserves yet. Australia, the 3rd largest producer of gold, has not added an ounce to its 80 tonnes gold reserve since selling off 167 tonnes in 1997. Canada, the 4th largest producer, has ZERO gold reserves, having sold off the last of its gold in 2016 (peak 1,023 tonnes in 1965). United Kingdom doesn’t produce gold, but it shares the Anglosphere trend of reduced reserves. Gold reserves peaked in 1950 at 2,543 metric tonnes, fell by 650 in 1970, fell further by sales of 415 tonnes 1999-2002 (‘Brown’s Bottom’ as gold hit a multi-decade low of $275 per ounce), and current gold reserve is reported as 310 metric tonnes. The Anglosphere rationale was that alliance with US protected them from economic and foreign exchange destabilisations, while gold was price volatile and zero yield. 

Time will tell whether the buyers of gold outperform the non-buyers as the world transforms through geostrategic rivalry and the rise of the Global East and South.