Central Banks Target Record Gold Buys Despite High Interest Rates

World Gold Council survey reveals 45% of central banks plan to boost reserves as bullion drops to its lowest since November, drawing buyers back in.

Global central banks are planning to accelerate their gold accumulation to historic highs, indicating that official sector demand remains a critical pillar of support for the precious metal despite recent price corrections.

According to the latest Central Bank Gold Reserves 2026 (CBGR) survey, conducted by the World Gold Council (WGC) and YouGov between 5 February and 19 May, a record 45% of respondents expect to increase their gold reserves over the next 12 months.

This represents the highest level of positive sentiment since records began nine years ago. Conversely, only 1% of institutions anticipate a reduction in their holdings.

The findings come at a time when institutional investors have been scaling back their gold exposure. Bullion has faced intense liquidations recently, sinking to its lowest level since November, as sticky Middle Eastern energy costs fuel market expectations that global interest rates will remain higher for longer. Because gold yields no interest, prolonged tightening cycles typically dent its appeal for commercial investors.

However, central bankers are looking past short-term macroeconomic indicators. Over the last four years, the official sector has accumulated an average of 1,000 tonnes of gold annually—a massive leap from the 500-tonne average recorded during the preceding decade.
 

Shaokai Fan, head of global central banks at the WGC, suggested that the market's recent pullback is being treated as a strategic buying opportunity.

"We observed that several central banks in 2025 viewed gold prices as overextended and chose to defer their purchases," Fan noted. "As prices moderate, it creates an attractive entry window for these institutions to rebuild their allocations."

The surge in sentiment is heavily concentrated in emerging markets and developing economies, where 53% of central banks expect to expand their gold holdings, compared to just 18% of their peers in advanced nations.

This divergence underscores a broader desire to diversify away from traditional reserve assets, particularly the US dollar. The survey revealed that 74% of respondents foresee a moderate or significant decline in the greenback’s share of global reserves over the next five years, while allocations to gold are expected to rise.

Crucially, this massive accumulation is changing how central banks manage liquidity. Rather than drawing down precious foreign currency reserves on the open market, half of the banks planning to acquire gold intend to fund their purchases via domestic purchase programmes using local currencies.

By buying directly from domestic miners in local legal tender, emerging market governments can conserve scarce foreign exchange. Meanwhile, 38% of respondents plan to fund new bullion purchases by liquidating existing reserve assets, such as sovereign bonds.
 

Geopolitical anxieties are also reshaping how and where central banks store their physical assets. While the Bank of England remains the world's most dominant custodian—utilised by 57% of respondents—there is a distinct trend toward localisation and geographic diversification.

The data showed that 9% of central banks increased their domestic storage over the past year, while 10% diversified their overseas vaulting locations, up from 5% and 2%, respectively, in 2025.

This structural pivot has triggered a notable drop in preference for traditional financial sanctuaries; the Swiss National Bank saw its custodian preference cut in half, falling to 6% this year from 12% in 2025.

The WGC noted that persistent geopolitical friction and political risks are increasingly dictating storage strategies. This structural shift is paving the way for ascendant bullion hubs, notably Singapore and Hong Kong, which are aggressively courting central bank reserves to deepen their localised gold ecosystems.

While high interest rates and falling speculative trading may keep gold prices under pressure in the immediate term, institutional buying from the world's monetary authorities is poised to provide a firm floor for the asset, cementing its status as the ultimate sovereign safe haven.