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Central banks are the world’s largest institutional holders of gold. As of 2025, official sector holdings total approximately 36,000 tonnes - around 17% of all gold ever mined. After decades of being net sellers, central banks turned to net buying in 2010 and have accelerated since 2022 at a pace not seen since the Bretton Woods era.
Understanding why they’re buying, which institutions are buying the most, and what this means for long-term supply and demand gives UK investors useful context for evaluating gold as a reserve asset.
At a glance: central bank gold buying
| Year | Net central bank purchases (tonnes) |
|---|---|
| 2010 | 77 |
| 2015 | 590 |
| 2019 | 668 |
| 2022 | 1,082 (record high) |
| 2023 | 1,037 |
| 2024 | 1,045 (estimated) |
Source: World Gold Council. Figures include unreported purchases where known.
Why did central banks shift from selling to buying?
Before 2010, Western central banks were net sellers of gold. The Bank of England famously sold 395 tonnes between 1999 and 2002, at prices between $256 and $296/oz - a decision consistently described as a policy mistake.
The shift to net buying after 2010 reflects several overlapping developments.
Dollar reserve diversification
The US dollar is the world’s primary reserve currency. Countries holding large foreign exchange reserves - China, Russia, emerging market economies - have historically kept much of those reserves in US Treasury bonds. But holding dollar assets exposes a country to US sanctions, as Russia discovered when its dollar reserves were frozen in 2022 following the invasion of Ukraine.
Gold cannot be frozen by a foreign government - it holds value entirely outside the dollar system, which makes it attractive to any country reassessing its vulnerability to US financial power.
Post-2022 acceleration
Russia’s frozen reserves triggered an immediate reassessment by central banks globally. Countries previously neutral on reserve composition started asking what their own vulnerabilities were - and gold, especially held domestically, became an obvious part of the answer.
China’s People’s Bank of China (PBOC) has been the largest reported buyer in recent years, though actual purchases are widely believed to exceed reported figures. Poland, India, Turkey, Singapore, and Czech Republic have all added significantly.
The UK and gold reserves
The Bank of England holds approximately 310 tonnes of gold. This is the UK’s official gold reserve, held partly in the Bank of England’s vaults and partly overseas.
The Bank of England also provides gold custody services for other central banks and the LBMA. The Bank’s gold vault is one of the largest in the world. This is separate from the UK government’s own reserve - the Bank also stores gold on behalf of around 30 central banks.
What this means for gold supply and demand
Central bank buying adds sustained demand to a market where supply growth is essentially flat - mining output has been around 3,600–3,700 tonnes per year since 2018. When official sector buying exceeds 1,000 tonnes annually, it absorbs roughly 30% of that mine supply.
This demand is also relatively price-insensitive. Central banks buying for reserve diversification and sanctions protection don’t stop buying because the price rises - if anything, rising prices confirm the thesis.
The structural demand from central banks since 2022 is one of the main reasons MetalsAlpha maintains a long-term bullish view on gold. It is not cyclical demand tied to investor sentiment - it reflects a geopolitical reassessment that is unlikely to reverse quickly.
Limits and risks
Central bank buying is not a permanent guarantee of gold prices. Buying can slow, pause, or reverse. Turkey’s central bank, for example, sold substantial gold holdings in 2023 to raise foreign exchange during a currency crisis.
It is also difficult to verify in real time - China in particular does not report all purchases to the IMF, and known figures likely understate actual totals by a meaningful margin.
For investors, the central bank buying thesis is a structural demand argument, not a short-term price catalyst. It suggests sustained underlying demand over a multi-year horizon.
Tax and regulation
No direct tax implications for UK investors: Central bank activity affects the gold market price, which in turn affects the value of your holdings. The tax treatment of your gold does not depend on central bank purchasing patterns.
Currency exposure: Some of the central bank buying argument is denominated in USD terms. For UK investors, GBP/USD movement adds another variable - a strongly rising pound can offset USD gold price gains.
How people use this information
Most UK retail gold buyers don’t trade in and out of positions based on central bank data. The relevance of this information is more as context for why gold demand has structural support, and why MetalsAlpha’s editorial position (long-term bullish on gold) is grounded in observable institutional behaviour rather than just monetary theory.
For investors evaluating a long-term position, the sustained official sector demand since 2022 is one of several structural factors alongside persistent budget deficits, dollar reserve concerns, and geopolitical fragmentation.
Frequently asked questions
Why do central banks hold gold instead of more bonds? Gold holds value independent of any issuer and cannot be devalued by another government’s policy. Government bonds are claims on a sovereign’s ability to repay - they can be defaulted on, inflated away, or frozen by sanctions. Gold has none of those vulnerabilities.
Does central bank buying push up the gold price? At above 1,000 tonnes per year, it absorbs roughly 25–30% of annual mine supply. This supports the price without necessarily being the primary day-to-day driver. Daily gold price movements are more influenced by real interest rates, dollar strength, and market risk appetite.
Which central banks hold the most gold? The United States holds the largest gold reserve at approximately 8,133 tonnes. Germany, Italy, France, Russia, and China follow. The IMF also holds significant gold reserves.
Is the Bank of England’s gold reserve open to the public? The Bank of England offers occasional tours that include a view of the gold vaults. These are available through its education programme. The actual vault contents are not publicly accessible.