Gold’s Back in the Spotlight And Central Banks Are All In

The world feels more unpredictable than ever, from the Israel–Iran tensions to the ongoing Russia–Ukraine war. In response, central banks are turning to something timeless: gold. A new survey by the World Gold Council reveals that a significant 95% of central banks anticipate increasing their gold reserves over the next year. That’s the highest reading since the survey began in 2018.

Central Banks Are Stockpiling at Record Pace

For three consecutive years, central banks have been purchasing more than 1,000 tonnes of gold annually. To put that in context, that’s more than double the average annual haul of the past decade. It’s a clear signal: gold is no longer just a backup plan; it’s front and centre in their risk strategy.

Gold’s popularity isn’t just about tradition; it’s about protection. Here’s what the survey revealed:

• 85% say gold performs well in times of crisis.
• 81% value how it diversifies its reserves.
• 80% see it as a rock-solid store of value.

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With Middle East tensions escalating, gold prices on the COMEX climbed nearly 5% in just three months, by roughly $147 an ounce.

Gold Edges Past the Euro in Global Reserve Rankings

Gold now makes up around 20% of official reserves worldwide, surpassing the euro’s 16%. The U.S. dollar still holds the crown at about 46%, but its dominance is slipping. Nearly 75% of central banks think their dollar holdings will shrink in the next five years, while gold, the euro, and China’s renminbi are expected to gain ground.

Emerging and developing countries are especially active here:

• 48% plan to raise their gold reserves this year.
• In advanced economies? Just 21% say the same.

At the same time, many are moving their gold closer to home. Approximately 59% of Indians now store it domestically, up from 41% the previous year. Why? With global tensions rising, they want more control and security. That’s also why countries are withdrawing gold from London and New York; the political risks are too high.

Markets Are Watching and Reacting

Gold prices have surged lately, doubling over the past two years and nearly hitting $3,500 an ounce in April 2025. Meanwhile, the U.S. Dollar Index dropped over 8% this year, and Treasury yields have softened. These are classic signs that investors and central banks alike are feeling nervous.

Tensions in the Middle East have only intensified the “risk-off” mood. Stocks fell, oil climbed, and investors ran to safer assets like gold.

Here’s the big picture: Indian central banks are shaking up their playbook.

• They’re reducing their reliance on the U.S. dollar.
• They’re adding more gold, euro, and renminbi to their reserves.
• And they’re thinking differently about how and where they store these assets.

Gold isn’t just a hedge against inflation; it has become a strategic tool. Many central banks are no longer just sitting on gold; they’re actively managing it as part of their broader financial planning.

With central bank demand remaining substantial and geopolitical risks showing no signs of easing, many experts predict that gold prices could continue to climb, with some even forecasting a jump to $5,000 per ounce by 2028.

Bottom Line: Gold Is Making a Comeback for a Reason

This isn’t just nostalgia for the Bretton Woods era. It’s a deliberate shift. Gold is back in style not because it’s shiny but because it’s solid. In a world filled with economic and political uncertainty, it offers:

• Strength in crises
• Low correlation to other assets
• Protection against inflation
• Symbolic and strategic weight

As the world grows more volatile, gold is becoming more than just a fallback; it’s a foundation. Not just a pretty metal but a serious player in the future of global finance.