Central Banks Buying Gold In Spite of Record Prices

Central banks are continuing to aggressively purchase gold in spite of the precious metal’s jump to record levels.

Investment firm Goldman Sachs estimates central banks are buying at a pace of about 80 metric tons a month, equivalent to about $8.5 billion at gold’s price as of early June.  

Adding purchases by sovereign wealth funds, the annual total is in the neighborhood of 1,000 tons, which is at least a quarter of annual gold production.

Goldman believes central bank purchases of gold on the London over-the-counter market have increased fivefold, since Russia invaded Ukraine in 2022.

"Central banks are structurally raising the floor under prices by steadily reducing the amount of gold available for trading in the market. As a result, even during corrections, the new lows are higher than where prices were just a few weeks earlier,” said Lina Thomas of Goldman Sachs Research

The U.S. has 78 percent of its reserves in gold, while Germany, Italy, and France all have gold positions of more than 70 percent of reserves. By contrast, India has only 13.5 percent of its reserves in gold and China has only 6.5 percent in gold, according to the World Gold Council.

As emerging economic powers increase their gold assets, Thomas predicts gold will set new record highs. Goldman Sachs Research predicts gold will rise to $3,700 a troy ounce by the end of 2025, and if there is a recession, she sees gold at $3,880 an ounce by year’s end.  

Through April, Poland was the leading central bank buyer of gold in 2025.

“Gold is the safest reserve asset,” said Adam Glapinski, governor of the National Bank of Poland. “It is free from direct links to the economic policy of any country, resistant to crises and retains its real value in the long term.”

Earlier this year, HSBC bank surveyed central banks on their gold plans. More than one-third said they intended to be buyers in 2025, while none indicated plans to sell.