Central Banks

Turkey has a long tradition of gold demand and, perhaps better than anywhere else, illustrates the broad role gold can play in modern society.

An increasingly complex geopolitical and financial environment is making gold reserves management more relevant than ever. In 2023, central banks added 1,037 tonnes of gold – the second highest annual purchase in history – following a record high of 1,082 tonnes in 2022.

Following a historical high level of central bank gold buying, gold continues to be viewed favourably by central banks. Our 2023 survey revealed that 24% of central banks intend to increase their holding reserves in the next 12 months.

Gold is a precious metal that has been used in many sectors around the world, from ancient history to the present day. Demand for physical gold is ever increasing due to its attributes: it is a global currency and convertible everywhere, it is incapable of being spoiled, it is recyclable, does not corrode, and has high conductibility. 

Financial sanctions imposed on Russia and specifically steps taken by a group of countries, led by the United States, to freeze the foreign reserves of the Bank of Russia are widely touted as auguring important changes in the international monetary and financial system. In this paper Prof. Barry Eichengreen asks whether one of these effects will be to enhance the international monetary and reserve role of gold.

The diversity of monetary gold accounting practices prompted the World Gold Council to undertake a study of central bank monetary gold accounting practices, first published in 2016 and updated in 2022 as Central bank accounting practices for monetary gold – 2022 update. The update adds central banks covered, better aligns practices with accounting frameworks, and expands the number of gold accounting issues covered.

Gold continues to be viewed favourably by central banks as a reserve asset. 25% of respondents say they have plans to increase their gold reserves, up from 21% last year.

This year marks 50 years since the end of gold’s formal link to currency. In the half-century that has passed since this milestone, the world has evolved in ways that were probably unimaginable to the political and economic leaders of that time. As the world has changed, so too has the role of gold. Whereas central banks steadily sold down their gold reserves for several decades after the end of the Bretton Woods system, they have since re-emerged as net buyers of gold for the past eleven years, with emerging market countries leading the way.