For much of the 1980s and 1990s governments felt interest-bearing assets and fiat currency reserves were more favourable than gold. As such gold holdings were sold, for example, the UK sold 395 tonnes of its reserves between 1999 and 2002, culminating in the infamous “Brown’s Bottom”.[1]
Switzerland sold 1,300 tonnes over a similar period.[2] This period of selling was so wide spread and consistent that European central banks were compelled to sign the Central Bank Gold Agreement in 1999, capping the amount signatories can sell in any one year to prevent a potential market collapse.
Conversely, today no such agreement is needed. Central banks have been net buyers for 16 consecutive years, purchasing more than 1,000 tonnes annually in 2022, 2023, and 2024 – nearly double the pre-2022 average.[3] While China and Turkey’s central banks were the largest gold buyers at the start of the decade, over the past several years Poland has emerged as the biggest.
Poland’s Narodowy Bank Polski (NBP) was the single largest central bank gold buyer globally in both 2024 and 2025, adding 90 tonnes in 2024 and a further 83 tonnes in the first ten months of 2025 — double that of other large buyers like Kazakhstan.[4] Total Polish reserves now exceed 515 tonnes, around 22% of its international reserves, and have now raised the bank’s target allocation from 20% to 30% in November 2025.[5] [6]
China by contrast – the largest buyer in 2023 alongside Poland – has moderated it’s buying by comparison, though reported holdings of around 2,300 tonnes are believed to understate the true number since there is not obligation to report.[7] [8] This shift in dominance is indicative of a structural change in perceptions of gold buying that extends beyond emerging markets and into established markets.
The more familiar driver for central bank buying is diversification. In 2024 a survey of 73 central banks conducted by OMFIF, 68% cited diversification as their primary purpose for holding gold.[9]
This case has become stronger in recent years, as alternatives have become more complex. The share of dollar – the primary reserve currency of the world – global reserves has fallen from over 70% in the 1990s to approximately 58% by 2025, according to the International Monetary Fund.[10] Gold has been used as an alternative diversifier because physically stored gold carries no counterparty or credit risk.
Alternatively, in recent years de-dollarisation has emerged as an equally significant driver for gold buying. When Russia invaded Ukraine in 2022, Western governments froze approximately $300 billion of Russian assets held in European institutions.[11] As a result, the gold that Russia held domestically could not be used. China and India, both major trading partners of Russia, and unaligned with Western policy, watched a sovereign nation’s reserves rendered inaccessible by the decisions of foreign governments. However, domestically held gold is not subject to the same vulnerability since there is no counterparty whose cooperation can be withdrawn.
This in essence is the de-dollarisation dilemma. The concern is that access dollar-denominated reserves is conditional. The Trump administration’s aggressive use of tariffs and broader confrontational posture towards trading partners has exacerbated these concerns. If falling foul of America’s trade or foreign policy can ultimately expose a country’s reserves to restriction, maintaining access is a matter of national security.
Poland’s gold buying is driven partly by its proximity to an active warzone and partly by the same diversification logic that drives buying across the world. However, Poland stores much of its gold at the Bank of England, reflecting a different relationship with western institutions than, for example, China or India, who have increased repatriation of gold from foreign custodians. India repatriated 100 tonnes from the Bank of England in 2024.[12]
Structural demand for gold remains, despite recent drawdowns in the price of gold from all time highs, central banks now account for over 20% of global demand.[13] While gold generates no income and is unlikely to replace the dollar system, for those seeking diversification to increase resilience, we believe the behaviour of central banks makes a compelling case for gold through the medium and long-term. They have spent 2 decades building positions, and current geopolitical volatility suggests that those who hold gold may be better insulated from further shocks.
[1] https://www.gov.uk/government/publications/the-sale-of-part-of-the-uk-gold-reserves-1999-2002
[2] https://weekendinvesting.com/gold-central-bank-history/
[3] https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-full-year-2024/central-banks
[4] https://ifamagazine.com/report-reveals-the-countries-that-bought-the-most-gold-in-2025-poland-leads-with-83-tonnes/
[5] https://www.gold.org/goldhub/gold-focus/2025/10/central-bank-gold-statistics-central-bank-gold-buying-rebounds-august
[6] https://www.investing.com/news/economy-news/polands-central-bank-to-boost-gold-reserves-to-30-of-assets-93CH-4235430
[7] https://www.gold.org/goldhub/data/gold-reserves-by-country?gad_source=1&gad_campaignid=12646210542&gbraid=0AAAAADt5-ALtaHJVHiWL2MohGj5Qj2EzZ&gclid=CjwKCAjwgO7RBhBKEiwAZNP85hY5H6UxC5J3WBsUi_ofWgTdfUvZ1ct1uRovY6CYGDHOzrKpcXDptxoCMhkQAvD_BwE
[8] https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-full-year-2023/central-banks
[9] https://www.ecb.europa.eu/press/other-publications/ire/focus/html/ecb.irebox202506_01~f93400a4aa.en.html
[10] https://cepr.org/voxeu/columns/dollars-status-through-lens-foreign-exchange-reserves
[11] https://www.brookings.edu/articles/what-is-the-status-of-russias-frozen-sovereign-assets/
[12] https://goldsilver.com/industry-news/article/why-central-banks-are-buying-gold-again/
[13] https://www.brookings.edu/articles/how-important-are-central-bank-holdings-of-gold/
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During the 1980s and 1990s, many governments preferred interest-bearing assets and fiat currency reserves over gold. As a result, several central banks reduced their gold holdings, including the UK and Switzerland.
Central banks are buying gold to diversify their reserves, reduce reliance on foreign currencies and improve resilience during periods of geopolitical uncertainty. Gold is also valued because physical holdings carry no counterparty or credit risk.
Poland’s central bank has significantly increased its gold reserves in recent years, becoming one of the world’s largest central bank buyers. Its gold holdings now represent a meaningful share of its international reserves, reflecting a broader focus on financial security and diversification.
Sustained central bank demand may support the long-term case for gold as a diversification tool. While gold does not generate income and can be volatile, central bank buying suggests it continues to play an important role in portfolio resilience and reserve management.
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