Central Banks Added 1,200 Tonnes in 2025 — What It Means for Gold in 2026

Central bank gold demand has transformed from a footnote in gold analysis to one of the market's most consequential structural forces. The 1,237 tonnes purchased in 2025 represents more than the total annual global mine production of several mid-sized mining countries, and it arrives as a one-directional flow with no price sensitivity — sovereign buyers buy gold as policy, not as a trade.

Understanding who is buying, why they are buying, and what it means for gold's price floor in 2026 is essential for any serious gold investor.

The Numbers: 2025 Central Bank Purchases

The pattern is unmistakable: central bank gold demand shifted structurally higher in 2022 following Russia's experience of having $300 billion in foreign exchange reserves frozen as a sanction — a watershed moment that accelerated already-existing de-dollarization trends across the Global South and BRICS economies.

Who Is Buying: The 2025 Top Purchasers

The breadth of buying is as important as the quantity. When only one or two large buyers drive demand, the market is vulnerable to policy changes at those institutions. The 2025 data shows buying across more than 40 central banks — a distributed demand base that is far more stable and harder to disrupt.

The China Question

China deserves separate attention because it represents both the largest single buyer and the largest uncertainty. The People's Bank of China stopped reporting gold purchases in its monthly foreign exchange reserves data in May 2024, after a record purchasing run that had seen reported holdings rise from 1,948 tonnes to 2,260 tonnes between 2022 and April 2024.

Market participants almost universally believe China has continued buying — possibly at an accelerated pace — while choosing not to disclose it. Potential reasons include:

• Dollar/market sensitivity: Large disclosed purchases would weaken the dollar (raising China's import costs) and strengthen gold (raising China's acquisition cost)
• Strategic ambiguity: Keeping reserve composition opaque reduces geopolitical vulnerability
• Alternative channels: Some analysts believe China is buying through commercial banks and state enterprises rather than the PBoC directly

If China is buying 200–300 tonnes annually off-books, the true 2025 global central bank demand figure could be 300–400 tonnes higher than the reported 1,237 tonnes — a staggering number relative to annual mine supply of approximately 3,900 tonnes.

Why Central Banks Are Buying: The De-Dollarization Thesis

Understanding the motivation behind central bank buying is essential to assessing whether this demand is structural (likely to persist) or tactical (likely to fade).

1. The Russia Sanctions Shock (2022)

When the US and EU froze approximately $300 billion in Russian foreign exchange reserves in February 2022, it sent an unambiguous signal to every non-allied central bank: dollar-denominated reserves held at Western institutions can be confiscated as a sanction. Gold held in domestic vaults cannot. This single event likely permanently increased gold's role in the reserve portfolios of any country that might one day face Western sanctions or political pressure.

2. Dollar Reserve Diversification

The dollar's share of global foreign exchange reserves has declined from 71% in 2001 to approximately 58% today — but has not collapsed, because there is no adequate substitute for the dollar's depth and liquidity. Gold serves as the non-sovereign alternative: it has no issuing country, no counterparty risk, and 3,000 years of recognized value. For reserve managers wanting to reduce dollar exposure without concentrating into the euro, yen, or renminbi, gold is the logical choice.

3. BRICS+ Expansion and Non-Dollar Trade

The BRICS alliance expanded in 2024 to include Saudi Arabia, UAE, Egypt, Ethiopia, Iran, and Argentina — bringing energy-exporting nations with massive reserve accumulation capacity into the gold-positive bloc. Intra-BRICS+ trade settled in local currencies (rather than dollars) creates ongoing FX reserve buildup in countries that are actively choosing to hold gold rather than US Treasuries with the proceeds.

4. US Fiscal Concerns

US federal debt exceeds $36 trillion as of early 2026, with annual deficit spending of $1.8–2.2 trillion. While the US has never defaulted, the arithmetic of accumulating debt at current pace raises long-term questions about dollar purchasing power that reserve managers are responding to with gold allocations.

The Price Floor Mechanism

The most practically significant insight from central bank demand data is what it means for gold's downside risk. Here is how the price floor mechanism works:

1. Central banks have explicit allocation targets, not price targets. When Poland announces a target of 20% gold in reserves, it must buy regardless of whether gold is at $4,000 or $5,000.
2. Sovereign buyers are price-sensitive in a specific way: declines are buying opportunities, not selling triggers. Unlike retail investors or hedge funds that might panic-sell on a 10% drop, central banks accelerate purchasing when price corrects.
3. The math of 750–850 tonnes per year: This is roughly 20% of annual global mine supply, purchased as a pure one-directional flow with no consideration of short-term price movements. It provides a baseline demand level that prevents supply from overwhelming the market during corrections.

2026 Outlook: What to Watch

For gold investors in 2026, the following central bank-related developments deserve close monitoring:

China PBoC Disclosure Resumption

If China resumes monthly gold reserve reporting — and especially if it reveals larger-than-expected holdings — this would be an immediate positive catalyst for gold prices. The uncertainty itself is also a persistent bullish undercurrent: gold bulls know there is a large potential buyer who has not yet shown their full hand.

Gulf State Allocations

Saudi Arabia and UAE, newly part of BRICS+, have not yet made significant public gold reserve additions. Saudi Arabia holds approximately 323 tonnes (2.6% of reserves) against an oil-export-driven reserve pool of over $500 billion. Increasing gold to even 5% of reserves would require purchasing of approximately 750 tonnes — equivalent to the World Gold Council's entire 2026 central bank demand forecast from a single buyer. This is a known potential catalyst with unclear timing.

IMF Reporting Changes

Watch for emerging market central banks that currently hold under 5% in gold to publicly announce allocation targets. Each announcement typically generates immediate buying and provides a forward-demand signal that the market can price in advance.

Investment Implications

Central bank demand data has three concrete implications for gold investors in 2026:

1. Deep corrections are buying opportunities, not capitulation signals. The structural demand floor at $4,500–$4,600 means gold dipping to those levels would likely be met with significant sovereign buying, limiting downside and potentially triggering sharp reversals. Investors who panic-sell into those levels will likely be selling to central banks.
2. The risk asymmetry has permanently shifted. In prior gold cycles, central banks were net sellers — acting as an ongoing headwind. They are now the most consistent marginal buyer. This changes the calculus of holding gold vs. alternatives: the denominator of risk is smaller when the world's largest institutions are structural buyers.
3. Geopolitical risk premium is structural, not temporary. Every expansion of sanctions, every addition to BRICS+, and every bilateral non-dollar trade agreement adds another incremental buyer to the central bank gold demand pool. This geopolitical premium that was once considered temporary is increasingly recognized as a permanent feature of gold's valuation.