An Inside Look at the World’s Biggest Paper Gold Market

30 Years of Central Bank Gold Demand

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Did you know that nearly one-fifth of all the gold ever mined is held by central banks?

Besides investors and jewelry consumers, central banks are a major source of gold demand. In fact, in 2022, central banks snapped up gold at the fastest pace since 1967.

However, the record gold purchases of 2022 are in stark contrast to the 1990s and early 2000s, when central banks were net sellers of gold.

The above infographic uses data from the World Gold Council to show 30 years of central bank gold demand, highlighting how official attitudes toward gold have changed in the last 30 years.

Why Do Central Banks Buy Gold?

Gold plays an important role in the financial reserves of numerous nations. Here are three of the reasons why central banks hold gold:

• Balancing foreign exchange reserves
  Central banks have long held gold as part of their reserves to manage risk from currency holdings and to promote stability during economic turmoil.
• Hedging against fiat currencies
  Gold offers a hedge against the eroding purchasing power of currencies (mainly the U.S. dollar) due to inflation.
• Diversifying portfolios
  Gold has an inverse correlation with the U.S. dollar. When the dollar falls in value, gold prices tend to rise, protecting central banks from volatility.

The Switch from Selling to Buying

In the 1990s and early 2000s, central banks were net sellers of gold.

There were several reasons behind the selling, including good macroeconomic conditions and a downward trend in gold prices. Due to strong economic growth, gold’s safe-haven properties were less valuable, and low returns made it unattractive as an investment.

Central bank attitudes toward gold started changing following the 1997 Asian financial crisis and then later, the 2007–08 financial crisis. Since 2010, central banks have been net buyers of gold on an annual basis.

Here’s a look at the 10 largest official buyers of gold from the end of 1999 to end of 2021:


Rank	Country	Amount of Gold Bought (tonnes)	% of All Buying
#1	🇷🇺 Russia	1,888	28%
#2	🇨🇳 China	1,552	23%
#3	🇹🇷 Türkiye	541	8%
#4	🇮🇳 India	395	6%
#5	🇰🇿 Kazakhstan	345	5%
#6	🇺🇿 Uzbekistan	311	5%
#7	🇸🇦 Saudi Arabia	180	3%
#8	🇹🇭 Thailand	168	2%
#9	🇵🇱 Poland	128	2%
#10	🇲🇽 Mexico	115	2%
	Total	5,623	84%

Source: IMF

The top 10 official buyers of gold between end-1999 and end-2021 represent 84% of all the gold bought by central banks during this period.

Russia and China—arguably the United States’ top geopolitical rivals—have been the largest gold buyers over the last two decades. Russia, in particular, accelerated its gold purchases after being hit by Western sanctions following its annexation of Crimea in 2014.

Interestingly, the majority of nations on the above list are emerging economies. These countries have likely been stockpiling gold to hedge against financial and geopolitical risks affecting currencies, primarily the U.S. dollar.

Meanwhile, European nations including Switzerland, France, Netherlands, and the UK were the largest sellers of gold between 1999 and 2021, under the Central Bank Gold Agreement (CBGA) framework.

Which Central Banks Bought Gold in 2022?

In 2022, central banks bought a record 1,136 tonnes of gold, worth around $70 billion.

Country	2022 Gold Purchases (tonnes)	% of Total
🇹🇷 Türkiye	148	13%
🇨🇳 China	62	5%
🇪🇬 Egypt	47	4%
🇶🇦 Qatar	33	3%
🇮🇶 Iraq	34	3%
🇮🇳 India	33	3%
🇦🇪 UAE	25	2%
🇰🇬 Kyrgyzstan	6	1%
🇹🇯 Tajikistan	4	0.4%
🇪🇨 Ecuador	3	0.3%
🌍 Unreported	741	65%
Total	1,136	100%

Türkiye, experiencing 86% year-over-year inflation as of October 2022, was the largest buyer, adding 148 tonnes to its reserves. China continued its gold-buying spree with 62 tonnes added in the months of November and December, amid rising geopolitical tensions with the United States.

Overall, emerging markets continued the trend that started in the 2000s, accounting for the bulk of gold purchases. Meanwhile, a significant two-thirds, or 741 tonnes of official gold purchases were unreported in 2022.

According to analysts, unreported gold purchases are likely to have come from countries like China and Russia, who are looking to de-dollarize global trade to circumvent Western sanctions.