For four years now, central bank gold buying has reshaped the global gold market, building a critical floor under prices. Even as the pace of official purchases cools, reserve managers still treat gold as a strategic asset used to hedge geopolitical turmoil, financial market swings, and fading confidence in traditional reserve assets.

At the central bank roundtable of the London Bullion Market Association's precious metals conference, reserve officials from Europe, Africa, and Latin America said gold's role long ago moved beyond simply hedging inflation or preserving value. That signals that even after a historic rally in prices, central bank demand will remain an important structural support for the gold market.

A Shift in Reserve Thinking, With Diversification at the Core

Massimiliano Castelli, head of sovereign institution strategy at UBS Asset Management and moderator of the panel, said the institution's latest reserve management survey shows gold remains the top strategic hedge for reserve managers. In 2026, 65% of surveyed central banks cited asset diversification as their primary reason for holding gold, followed by geopolitical risk management. Over the next 12 months, gold, the euro, and assets in major Asian currencies are all reserve categories central banks plan to increase. The survey reflects how the logic behind central bank gold buying has evolved: beyond geopolitical risk considerations, gold has become deeply embedded in long-term strategic asset allocation frameworks.

Tomasz Malkowski, chief dealer for foreign exchange and gold at the National Bank of Poland, said central banks should not view gold through the lens of short-term price swings. "Gold is a cornerstone of stability; in investors' eyes it represents national stability and serves as an anchor during times of financial turmoil," he said. He noted that gold carries no conventional credit risk, and Poland treats it as a strategic asset from a long-term perspective. Poland has been one of the most active central bank buyers in recent years, launching its accumulation program in 2018, when its gold reserves stood at about 100 tonnes, or 5% of total reserves, with a goal of raising them to 700 tonnes. He stressed, however, that the purchases are not meant to replace euro or dollar reserves, but to build a more diversified reserve structure. Geopolitical instability is playing an ever-larger role in reserve management, and geopolitical risk has become more important than inflation.

Veteran Reserve Powers Stick With Gold as Emerging Nations Use It to Strengthen Their Standing

Gioia Cellai, deputy director general for market and monetary policy operations at the Bank of Italy, said Italy holds about 2,450 tonnes of gold, which has played a role in several major economic and political crises. In 1974, when Italy faced financial difficulties, it pledged 500 tonnes of gold to Germany's Bundesbank in exchange for a $2 billion loan. "Gold is an asset that can be pledged to official institutions, and it is especially valuable in times of crisis," she said. She added that gold provides a powerful diversifying hedge for the Bank of Italy's balance sheet; while the central bank does not set a fixed allocation ratio, gold's share of its assets climbed back to about 30% in 2025 as prices rose.

Gershon Agbledzorwu, head of financial markets at the Bank of Ghana, said Ghana launched a domestic gold purchase program in June 2021, using local currency to buy domestically produced gold, turning mineral resources into long-term national wealth and strengthening resilience against external shocks. The program has scaled up year by year, with about 110 tonnes purchased in 2025. Ghana has also reached agreements with major mining companies to buy 30% of their output, expected to add 30 tonnes of gold a year. "For us, gold means more than asset diversification," he said. Backed by this policy, Ghana's currency has strengthened and inflation has fallen from 24% in 2024 to 5.4% in 2025.

No Liability Status Stands Out, and De-Dollarization Is Not Simply Abandoning the Dollar

Panelists noted that gold is not anyone's liability, a trait that is especially valuable in today's environment of geopolitical fragmentation and rising sanctions risk. Physical gold can be stored in a country's own vaults, lowering sanctions exposure. Massimiliano Castelli argued that today's de-dollarization amounts to "dissatisfaction, but not replacement": countries are not dumping U.S. Treasuries on a large scale, but gradually diversifying on top of existing reserves, and gold benefits from that. A live poll at the conference showed nearly 90% of attendees believe central bank gold buying will either accelerate further or hold at current levels over the next five years. Henk Janse van Vuuren, a senior manager at the South African Reserve Bank, said gold's value is shown more in tail-risk events, precisely the kind of risk that traditional asset models struggle to capture. The goal of central banks is to safeguard national reserve strength and credibility over the long term, and gold's strategic value cannot be judged solely by short-term price moves.

Conclusion

In short, the underlying logic of global central bank gold buying has shifted toward long-term strategic allocation. Whether longstanding reserve powers or emerging market nations, all value gold's lack of counterparty liability, its sanctions resistance, and its ability to hedge tail risk. Although the near-term pace of purchases may fluctuate, the broader trend of central banks acting as steady buyers in the gold market is set to continue.

Spot gold daily chart. Source: Yihuitong. As of 7:27 a.m. Beijing time on October 7, spot gold was quoted at $4,167.82 an ounce.

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