Central banks seem to love gold. We’ve previously discussed the complex economic and geopolitical reasons why central banks have been adding gold to their reserves. The latest World Gold Council data shows no slowdown in the trend. In the final quarter of 2024, “central banks continued to hoover up gold at an eye-watering pace”, with buying exceeding 1,000t for the third consecutive year. Overall in 2024, central banks added 1,045t to their reserves. The National Bank of Poland proved the hungriest for gold, adding 90t to its reserves in 2024.
Central banks’ appetite for bullion
The World Gold Council notes that demand for gold in Central Europe extends beyond Poland. The Czech National Bank added 20t to its reserves, an increase on the previous year. And the Central Bank of Hungary “announced a 16t increase in its gold reserves in September”.
The Central Bank of Turkey and the Reserve Bank of India remain significant purchasers of gold, adding 75t and 73t in 2024 respectively.
Pole position
Gold is prized as a highly liquid asset. It’s also a solid asset, literally. Gold isn’t just numbers on a screen (complex gold ETFs notwithstanding), it’s heavy metal bars, coins or jewellery. Gold reserves need to be kept somewhere. Buying large quantities of gold has real-world implications.
For instance, Poland hasn’t just been on a gold-buying spree, it’s moved billions of dollars’ worth of gold into the country over recent years. Hundreds of personnel were needed to fly tons of gold from the Bank of England to safe storage in local Polish locations.
Other countries, including Nigeria and India, have chosen to repatriate portions of their gold reserves. Whatever the strategic value of these decisions, the logistics of moving large amounts of gold around the world are massively complex and demanding.
The physicality of gold also affects institutions. Recently, investors saw delays in drawing gold from the Bank of England, owing to surging transatlantic demand for the yellow metal.
With ongoing uncertainty about tariffs, and an generally unpredictable macro environment, many will bet that demand for gold will remain strong.
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