Why are central banks doubling down on gold reserves?

Dubai: Central banks around the world are on a gold buying spree — and it’s not slowing down anytime soon.

For the third year in a row, global central banks have added over 1,000 tonnes of gold to their reserves, far above the average 400 to 500 tonnes seen annually over the past decade. The data comes from the World Gold Council’s (WGC) latest 2025 Central Bank Gold Reserves (CBGR) survey, which tracks sentiment and strategy among reserve managers.

The jump in gold demand comes at a time of growing uncertainty across the globe — with ongoing conflicts, trade tensions and inflation all clouding the economic outlook. For reserve managers, gold remains a key tool to manage risk, protect value, and diversify away from overreliance on any single currency.

The WGC survey found that 95% of central bank respondents expect global gold reserves to grow further in the next 12 months. That’s nearly unanimous.

Even more striking — a record 43% of central banks say they will increase their own gold holdings during that time. None of the respondents expect to cut back on gold.

The main reasons? According to the WGC, it comes down to three things:

In short, gold is still viewed as a reliable long-term store of value, especially during times of uncertainty.

Interestingly, 73% of respondents believe the share of U.S. dollar holdings in global reserves will decline over the next five years. At the same time, they expect allocations to gold — as well as other currencies like the euro and Chinese renminbi — to increase.

This shift is part of a broader trend known as de-dollarisation, and it's something UAE investors should watch. A weaker global appetite for dollars often pushes gold prices higher — which could affect both the price shoppers pay for jewellery in Dubai and the returns investors earn on gold-backed assets.

Another trend identified in the survey is that more central banks are now actively managing their gold portfolios. This includes strategies to enhance returns and better manage risks. The share of respondents doing this rose from 37% in 2024 to 44% this year.

While boosting returns is still the top priority, risk management is now the second most common reason for this hands-on approach — overtaking short-term trading motives.

When it comes to storage, the Bank of England remains the most commonly used vault, with 64% of central banks keeping at least some of their gold there.

However, domestic storage is on the rise too. In 2025, 59% of central banks are storing gold within their own borders, up from 41% last year. That said, only a small number — just 7% — plan to increase their domestic storage further in the next year.

For gold buyers and investors in the UAE, the takeaway is clear: global confidence in gold remains strong. Central banks — the biggest and often most cautious buyers — are still increasing their exposure to the precious metal, which helps support long-term prices.

Whether you’re buying gold for personal use, hedging against inflation, or investing for the future, the message from the world’s reserve managers is loud and clear: Gold still holds its value — and its place — in a fast-changing world.