Central banks have remained bullish on gold, adding a total of 244 tonnes to their reserves in the first quarter of 2025, according to the latest report from the World Gold Council (WGC). Although this represents a decline from the record-setting pace of late 2024, it still marks a robust 24% increase over the five-year quarterly average and is just 9% below the elevated levels seen over the past three years. This sustained appetite for gold underscores the growing importance of the precious metal in national financial strategies as global uncertainties mount.
Major Gold Buyers Lead the Charge
Poland once again emerged as the largest single buyer in Q1 2025, adding a substantial 49 tonnes to its reserves. This rapid accumulation, amounting to 54% of its total gold purchases for the entire previous year (90 tonnes), has brought Poland’s gold reserves to 497 tonnes, representing 21% of its total foreign reserves. Governor Adam Glapiński, who has led the National Bank of Poland (NBP) since 2016, has been a vocal advocate for gold, often highlighting its role as a symbol of financial stability and national strength. In 2019, the NBP undertook a dramatic and highly secure mission to repatriate 100 tonnes of gold from the Bank of England to its vaults in Warsaw – a covert operation involving eight flights and extensive security measures to move 8,000 gold bars.
Meanwhile, China’s appetite for gold remained steady, with the People’s Bank of China (PBOC) adding 13 tonnes in Q1, raising its total reserves to 2,292 tonnes – 6.5% of its overall foreign reserves. Kazakhstan also added 6 tonnes, pushing its holdings to 291 tonnes, while the Czech National Bank increased its reserves by 5 tonnes, reaching 56 tonnes by the end of the quarter – more than four times its holdings at the end of 2021.
Other notable buyers included the Reserve Bank of India, which added 3 tonnes, bringing its total reserves to 880 tonnes (12% of total reserves), and the Central Bank of Turkey, which added 4 tonnes. The State Oil Fund of Azerbaijan (SOFAZ), a sovereign wealth fund, also made a significant move, increasing its gold holdings by 19 tonnes to a total of 165 tonnes, now accounting for 26% of its portfolio.
Sales in the first quarter were relatively modest, with only a few central banks reducing their gold holdings. The Central Bank of Russia sold approximately 3 tonnes, while the CIS central banks of Uzbekistan and the Kyrgyz Republic reduced their reserves by 15 tonnes and 2 tonnes, respectively. These transactions likely reflect profit-taking at near-record gold prices rather than a fundamental shift in reserve strategy, as both Russia and Uzbekistan have historically been steady net buyers over the long term.
Behind the Numbers: The Real Scale of Central Bank Gold Buying
Despite the impressive official figures, the true scale of central bank gold accumulation may be even larger. According to WGC data, reported purchases only accounted for about 22% of total central bank demand in Q1, suggesting that a significant portion of the buying remains unreported. This could be due to a combination of delayed reporting, covert purchases by non-central bank institutions, and increased lending activity, which can temporarily obscure ownership changes in the official data.
Additionally, gold lending surged during the quarter as central banks sought to generate returns on their holdings amid volatile market conditions. Lending rates briefly spiked as demand for physical gold soared, driven in part by uncertainties surrounding the new US Administration’s tariff policies. However, this lending activity, which represents a temporary shift rather than a permanent transfer of ownership, is not included in the official WGC demand estimates.
What’s Driving the Global Central Bank Gold Rush?
Several factors are driving this wave of central bank gold purchases. Chief among them is the desire to diversify away from traditional reserve currencies, particularly the US dollar, as geopolitical tensions rise and economic uncertainties deepen. Analysts point to the following key motivations:
- Protection against sanctions and financial restrictions
- Desire for assets free from counterparty risk
- Growing concerns over potential vulnerabilities in the global financial system
- The strategic need to reduce dependence on the US dollar as a reserve currency
This trend was highlighted by Mark Valek, a fund manager at Incrementum AG and co-author of the widely respected ‘In Gold We Trust’ report, who noted that central banks are seeking stability in an increasingly unpredictable economic landscape. Valek and his co-author, Ronald-Peter Stöferle, have maintained a long-term gold price forecast of $4,800 by the end of 2030, with an interim target of $4,080 by the end of 2025. Given recent market momentum and ongoing geopolitical risks, they believe these targets remain achievable.
With global uncertainties unlikely to abate in the near term, analysts expect central banks to continue their aggressive gold buying. As inflationary pressures, geopolitical risks, and financial system vulnerabilities persist, gold is likely to remain a cornerstone of national reserve strategies, providing a hedge against economic turbulence and political instability.