In a striking shift in global reserve management, central banks around the world are accumulating gold at record rates. Emerging economies such as India, China, and Poland are leading the charge, viewing gold not just as a safe-haven asset but as a powerful strategic tool in an increasingly uncertain global economy.
The Global Gold Rush
In 2025, global central-bank gold purchases are expected to reach around 900 tonnes — marking the fourth consecutive year of above-average buying. India’s gold reserves have now crossed the $100 billion mark, while China continues to steadily expand its holdings. From Eastern Europe to the Middle East, governments are turning to gold to secure their financial footing and reduce exposure to volatile currencies.
Why Are Central Banks Buying So Much Gold?
1. Inflation and weak growth: Persistent inflation and sluggish growth in advanced economies have made traditional assets such as government bonds less reliable. Gold, which tends to hold value during periods of economic uncertainty, offers a more stable store of wealth.
2. De-dollarisation and geopolitical risk: With rising geopolitical tensions and concerns about overreliance on the US dollar, many nations are seeking alternatives. Gold provides insulation from sanctions and currency fluctuations, strengthening financial sovereignty.
3. No counterparty risk: Unlike fiat currency or bonds, gold carries no issuer risk and cannot default. This makes it especially attractive during times of financial instability.
4. Long-term structural shift: Analysts say this isn’t just a short-term hedge — it’s a strategic rebalancing. Central banks are intentionally increasing gold’s share in their reserve portfolios to prepare for a more multipolar financial world.
Global Implications
Rising prices and tighter supply: With central banks buying aggressively, the physical gold market is facing structural supply pressure. Mine output has remained flat, while recycling volumes have dropped, fueling record-high prices.
Pressure on the dollar’s dominance: The US dollar currently accounts for about 58 percent of global reserves, but that share is slowly shrinking. A growing number of central banks are diversifying into gold, the euro, and even regional currencies.
Investor behavior changing: As central banks lead the gold charge, private investors are following suit through exchange-traded funds, mining stocks, and sovereign gold bonds.
What It Means for India
For India, gold now forms a larger share of its foreign-exchange reserves than ever before. The Reserve Bank of India’s strategy reflects a cautious move away from dollar assets, aligning with the broader trend of de-dollarisation. This also enhances the country’s flexibility in managing external shocks and trade imbalances.
Risks and Challenges
Despite its appeal, gold is not without risks. Prices have already surged to record highs in 2025, raising concerns about overvaluation. A stronger dollar or higher real yields could trigger corrections. Gold is also less liquid than government bonds, making it harder to deploy quickly during crises.
What to Watch
The next few months will reveal whether this gold buying spree continues or stabilizes. Analysts are closely watching quarterly reports from global institutions to track how much bullion central banks are adding to their reserves. Any slowdown could signal that the current phase of accumulation is nearing its peak.
The Bigger Picture
Gold’s resurgence as a reserve asset underscores a broader transformation in global finance. The shift from a dollar-centric world toward a more diversified reserve structure is now clearly under way. As countries brace for an era of geopolitical uncertainty and economic fragmentation, gold is once again shining as the ultimate symbol of security and independence.