Why official gold demand and changing reserve strategies deserve attention
Central banks are continuing to accumulate gold at a pace well above the historical average, reinforcing the metal’s role in global reserve management.
According to Goldman Sachs Research, central banks purchased an estimated 79 tonnes of gold in August 2026, compared with an average of approximately 17 tonnes per month before 2022. That represents roughly 4.6 times the historical monthly average.
The figures highlight a significant change in official-sector gold demand. However, the distinction between estimated purchases and officially reported transactions is important when assessing the scale of this trend.
Central bank demand remains a significant part of the gold market
For decades, central bank gold purchases were generally more modest than the buying activity observed in recent years. Since 2022, demand has strengthened as monetary authorities reassess their reserve holdings against a backdrop of geopolitical uncertainty, changing trade relationships and concerns about the concentration of financial risk.
Goldman Sachs expects central banks to purchase an average of around 50 tonnes per month in 2026, compared with the pre-2022 average of 17 tonnes. Its estimates incorporate assessments of official-sector activity that may not yet appear in published reserve data.
The World Gold Council’s central bank research provides additional context. Reported net purchases reached approximately 289 tonnes in the second quarter of 2026, up from around 178 tonnes in the same quarter of 2025.
These figures suggest that central banks remain important participants in the physical gold market, even though buying varies considerably between countries and from month to month.
Why are central banks accumulating gold?
Gold serves a different purpose from foreign currency reserves and government bonds.
A government bond represents a financial obligation of its issuer. Gold bullion, by contrast, is a physical asset that does not depend on another government or institution fulfilling a payment promise.
This distinction can matter when monetary authorities consider sanctions exposure, counterparty risk, currency concentration and the resilience of their national reserves.
Gold also has an established international market. Depending on its location, form and market acceptability, bullion can be sold, transferred or used to support a range of reserve-management operations.
For these reasons, some central banks view gold as a means of diversifying their reserves rather than relying exclusively on assets denominated in foreign currencies.
The freezing of Russian central bank assets following Russia’s invasion of Ukraine in 2022 was an important development in discussions about reserve security. It highlighted the potential geopolitical risks associated with certain foreign-held financial assets and contributed to renewed interest in the characteristics of gold.
This does not mean every central bank is abandoning the US dollar. Rather, it illustrates why some monetary authorities may wish to maintain a broader mix of reserve assets.
Countries are also reconsidering where their gold is stored
Gold ownership and gold storage are two separate issues.
A central bank can own gold while holding it in its own country or entrusting it to another central bank or specialist vault overseas. The choice of location can affect how quickly the metal can be accessed, traded or transported during a crisis.
A notable example emerged in September 2026, when De Nederlandsche Bank, the Dutch central bank, announced that it had reorganised the location of part of its gold reserves.
Between March and August, approximately 86 tonnes of Dutch gold were transferred from holdings in the United States and Canada to London and the Netherlands.
According to De Nederlandsche Bank’s official announcement, the operation was intended to improve the liquidity and tradability of its reserves, strengthen crisis preparedness and distribute holdings more evenly across locations.
The operation involved both physical transportation and market transactions. Approximately 59 tonnes of gold held in New York were sold and replaced with gold purchased in London. More than 27 tonnes were physically transported from North America to the Netherlands, with a similar quantity subsequently transferred from the Netherlands to London.
Importantly, the total size of the Dutch gold reserves did not change.
The World Gold Council’s analysis of changing gold storage arrangements explains why location matters. Gold held in different financial centres can have different levels of immediate tradability and accessibility.
The Dutch example therefore demonstrates a move to improve access to and management of existing reserves, rather than an increase in the country’s total gold holdings.
Does this mean the world is moving away from the US dollar?
The evidence supports a more nuanced conclusion.
Gold accumulation and reserve diversification can reduce a central bank’s relative dependence on individual foreign currencies. Physical gold also has characteristics that differ from deposits and securities held within another country’s financial system.
However, a change in gold storage location does not automatically demonstrate a loss of confidence in the US dollar. London is one of the world’s principal centres for physical gold trading, and moving bullion there can be a practical decision about liquidity and market access.
The US dollar also remains a major component of global foreign exchange reserves and continues to play a central role in international trade and finance.
The more defensible conclusion is that some central banks are seeking greater diversification, flexibility and resilience in the way they manage national reserves. Gold is one of the assets being used to pursue those objectives.
What does this mean for physical gold?
Central bank purchases are one part of the broader gold market, alongside jewellery demand, investment demand, exchange-traded funds, mine supply and recycling.
Persistent official-sector buying can provide an important source of demand, particularly when purchases reflect long-term reserve objectives rather than short-term trading decisions. Nevertheless, central bank demand alone cannot guarantee that gold prices will rise. Interest rates, currency movements, investor positioning and other market forces also influence prices.
For people interested in understanding gold as a physical asset, the central bank trend raises a broader question: why do monetary authorities continue to hold an asset that has no issuing government and no contractual promise to repay?
For many reserve managers, the answer lies in diversification, liquidity, resilience and gold’s long-established role in the international monetary system.
At FirstGold, we believe it is important to understand the difference between owning physical bullion and having exposure to a financial product linked to its price. Physical bullion represents direct ownership of metal, subject to the ownership, custody and storage arrangements involved.
Build wealth one gram at a time. Learn more about buying and holding physical gold and silver through FirstGold.
Disclaimer: This article is for general information and educational purposes only. It does not constitute financial advice or a recommendation to buy or sell gold. Gold prices can rise or fall, and physical bullion carries costs and risks, including premiums, storage, insurance and resale spreads.
Key original and independent sources behind the article:
Goldman Sachs Research — central-bank purchase estimates and the historical monthly average.
World Gold Council: Central bank gold demand, Q2 2026 — reported purchases and quarterly comparisons.
De Nederlandsche Bank — the Dutch central bank’s official explanation of its gold transfers.
World Gold Council: Why are central banks moving their gold reserves? — background on storage locations and accessibility.
ABC News Australia — independent Australian reporting on the Dutch transfer.
