Aggressive Gold Purchases by Central Banks Motivated by Desire for Security

Thu Feb 20 2025

Key Takeaways:

· For three years, central banks have purchased more than 1,000 metric tons of physical gold.

· Aggressive gold purchases by central banks are seen as motivated by a variety of economic factors, and this isn’t expected to change.

· Generally, banks have noted that “security” is the overwhelming reason for buying physical gold.

· Consumers are taking a cue from banks in their acquisition of physical gold as a stabilizing factor in individual portfolios—including through gold IRAs.

For centuries, gold has been a trusted store of value. While some might expect its role as a monetary asset to decline, central banks continue to prove otherwise. Recent data from the World Gold Council shows aggressive central bank gold purchases have led to historically high annual purchases, reinforcing gold’s importance as a reserve asset—and possibly for private investors as well.

Since the global financial crisis of 2008, central banks have been net gold buyers for 15 consecutive years. Demand surged in 2022, reaching all-time highs, with 2023 purchases nearly matching that record [1].

Analysts expected a slowdown in 2024, but it never came. Instead, central banks continued buying at unexpectedly high levels for the third year in a row, underscoring gold’s lasting role in global finance [1].

Central Bank Gold Demand Remains at Historic Highs

According to the World Gold Council, central bank gold demand in 2024 was just below 2023 levels, making it the third-highest year in history for central bank gold purchases [1].

2024 marked the third consecutive year annual central bank gold demand exceeded 1,000 metric tons [1].

In an era of economic uncertainty, this historic sustained demand sends a clear message about gold’s role in portfolio diversification. As we examine the latest trends, it’s worth considering what individual investors—particularly retirement savers—can learn from central banks’ continued accumulation of the world’s oldest asset.

Central Banks Shift to Gold as Dollar Concerns Grow

In the last year, gold hit new all-time highs 40 times, yet central banks continued aggressive buying. Demand for the year totaled 1,045 metric tons, close to the 1,080 metric tons in 2022 and 1,050 metric tons in 2023, marking a third consecutive year above 1,000 metric tons—a threshold analysts initially thought “unlikely” [2].

To put this surge in context, annual central bank gold demand from 2010 to 2021 averaged just 473 metric tons—less than half of recent totals [1]. The sharp acceleration since 2022 suggests more than just portfolio diversification; it signals a deliberate shift away from the U.S. dollar’s dominance in global reserves.