Central banks boost gold reserves as 30% plan to increase allocations

Central banks are accelerating gold purchases as geopolitical risks drive a structural shift away from dollar-denominated reserves.

Gold demand from central banks is intensifying, with 30% of institutions planning to increase their allocations, according to an OMFIF survey.

"Gold purchases are driven more by strategic considerations to shield against geopolitical risks," the survey found, with 51% of respondents citing that as the primary motivation.

Some 82% of central banks are expected to hold physical gold by 2026, up from the prior year. A further 61% of respondents anticipate gold prices stabilizing between $5,000 and $6,000 per ounce by June 2027.

The buying spree signals a broader erosion of confidence in fiat currencies, with central banks simultaneously reducing dollar allocations in favor of the euro and renminbi. Emerging markets are leading the shift, the survey showed.

Dollar Share Declines as Euro, Renminbi Gain Ground

The survey documented a notable reduction in dollar holdings as central banks diversify reserve currencies. The euro and renminbi are the primary beneficiaries, though the survey noted challenges remain for both alternatives in achieving reserve-currency status comparable to the dollar. Emerging-market central banks are driving the trend most aggressively, reflecting a multipolar reserve system taking shape.

AI Adoption Rises in Reserve Management

Central banks are also integrating artificial intelligence into their operations, the OMFIF survey showed. Institutions are deploying AI tools to enhance decision-making, improve efficiency in reserve management, and analyze macroeconomic data more rapidly. The adoption of AI in central banking remains early-stage but is accelerating, with respondents citing improved forecasting and risk assessment as key benefits.

This article is for informational purposes only and does not constitute investment advice.