Central banks around the world are buying gold..!? Why?
Central banks around the world are accumulating gold at an unprecedented rate. For the third consecutive year, more than 1,000 tonnes of gold have been added, according to the 2025 Central bank gold Reserves (CBGR) survey released yesterday, june 17. This is more than double the average annual purchases of 400-500 tonnes in the previous decade. The total gold held by central banks worldwide was 26,000 tonnes in 2009 and increased to 32,000 tonnes in 2024. In that sense, central banks have bought more than two and a half tonnes of gold in the last 4 months alone. The world's top 10 central banks, including india, hold a large portion of this. If we look at that, the top 10 countries are the US, Germany, Italy, France, Switzerland, Japan, the Netherlands, China, russia and India.
Why hold gold: The top reasons for holding gold reserves are its value preservation capabilities (80 percent), portfolio diversification benefits (81 percent), and reliable performance in challenging times (85 percent). According to CBGR 2025, almost three-fourths of respondents expect a modest decline in US dollar holdings within global foreign exchange reserves over the next 5 years. In contrast, allocations for the euro, Chinese renminbi, and gold are expected to increase. gold and the US dollar generally share an inverse relationship. When the dollar weakens, gold prices rise. Because gold becomes cheaper and more attractive as a store of value for holders of other currencies.
Gold for geopolitical protection: Central banks are looking at gold not just as a store of value or inflation hedge, but also as a geopolitical hedge. As conflicts in Eastern europe and the Middle east intensify and global interest rate paths diverge, gold’s neutrality and crisis resilience make it a reserve asset. 43% of respondents in this survey said they plan to increase their own gold reserves in the next 12 months, the highest ever.
Reserve bank of india buying gold: The bank OF INDIA' target='_blank' title='reserve bank of india-Latest Updates, Photos, Videos are a click away, CLICK NOW">reserve bank of india (RBI) is said to be increasing its gold purchases day by day. india has bought 57.5 tonnes of gold in the financial year 2024-25 alone. This is the 2nd highest annual purchase after 2017. As the global economy is getting worse, there is a situation of uncertainty about what will happen next in the international economy. Due to this, many countries are buying and accumulating gold. In that regard, in the last 5 years, the gold reserves of the bank OF INDIA' target='_blank' title='reserve bank of india-Latest Updates, Photos, Videos are a click away, CLICK NOW">reserve bank of india have increased by 35% and have increased to 880 tonnes in march 2025. It is noteworthy that india is ranked 7th in the world in terms of gold reserves.