Central banks step up gold buying amid global uncertainty — Expert decodes the psychology behind it
India’s gold reserves have surpassed the $100 billion mark for the first time, reaching $102.37 billion as of October 10, according to the Reserve Bank of India. The milestone comes despite a sharp slowdown in the central bank’s gold purchases this year, aided largely by a global price rally that has lifted bullion by about 65% in 2025
- Nov 1, 2025,
- Updated Nov 1, 2025 12:35 PM IST
Central banks across the world have been ramping up their gold purchases, underscoring a renewed preference for the yellow metal as a store of value amid geopolitical and monetary uncertainty. According to the World Gold Council, global central banks collectively bought 220 tons of gold in the third quarter of 2025, marking a 28% jump from the previous quarter. The buying spree comes even as gold prices hover near record highs, signaling that monetary authorities view gold as a strategic asset—not just a speculative one.
The National Bank of Kazakhstan emerged as the largest single buyer during the quarter, while Brazil’s central bank made a notable comeback to the market after a four-year hiatus. India’s gold reserves have surpassed the $100 billion mark for the first time, reaching $102.37 billion as of October 10, according to the Reserve Bank of India. The milestone comes despite a sharp slowdown in the central bank’s gold purchases this year, aided largely by a global price rally that has lifted bullion by about 65% in 2025.
Gold now accounts for 14.7% of India’s total foreign exchange reserves — the highest share since 1996-97 — nearly double its proportion a decade ago.
Neutral asset
Explaining the renewed appetite for gold, Alok Jain, founder of Weekend Investing, said that central banks are seeking a “neutral asset” that lies outside the control of any single government. “So far, that neutral asset was U.S. Treasuries,” he noted. “But with rising geopolitical tensions and growing distrust among nations, gold has replaced that requirement. It’s the one asset that no government can manipulate.”
In recent years, several global developments—from sanctions on Russia to rising trade tensions between major economies—have made central banks wary of overexposure to the U.S. dollar. As countries look to reduce dollar dependency and diversify reserves, gold has become the natural choice. Jain explained that while the global financial system may not be returning to a gold standard, “some form of sound money needs to come back because the current system of unlimited money printing and rising fiscal deficits is unsustainable.”
Fiat instability
For central banks, gold is more than just a portfolio diversifier—it’s a hedge against currency debasement. As major economies continue to expand their money supply to fund welfare schemes and maintain growth, the value of fiat currencies faces gradual erosion. “No politician wants to be tied down by the gold standard,” Jain said. “Printing money brings short-term popularity, but it erodes long-term stability. Central banks recognize this and are quietly preparing by building gold reserves.”
Gold rush
From a trading psychology perspective, Jain compared the central bank accumulation of gold to a contrarian investment strategy—buying when others are complacent. “In markets, most traders lose money by following herd behavior,” he said. “Similarly, central banks are acting in the opposite direction of short-term speculation. While retail traders chase quick gains in equities or crypto, central banks are focused on long-term stability.”
This contrarian approach underlines the broader mindset shift—from speculative risk-taking to risk management through tangible assets. The underlying message is clear: when trust in global systems weakens, gold regains its monetary relevance.
Industry analysts attribute the uptick in gold buying to mounting concerns over the stability of the US dollar and the search for safe-haven assets. Many central banks appear to view gold as a crucial hedge, especially in periods of heightened market volatility and currency risk. The World Gold Council emphasised that the recent increase in purchases demonstrates the metal’s enduring appeal, even as its price remains at historical peaks. The report indicates that official demand has played a significant role in supporting the overall gold market throughout 2025.
Looking ahead
The World Gold Council expects sustained buying momentum in the coming quarters, particularly from emerging markets in Asia and the Middle East. As global debt levels rise and fiscal deficits widen, central banks appear intent on securing assets that transcend national politics and monetary policy cycles.
In essence, gold has reasserted itself not merely as a commodity, but as the anchor of confidence in an increasingly uncertain world.
Central banks across the world have been ramping up their gold purchases, underscoring a renewed preference for the yellow metal as a store of value amid geopolitical and monetary uncertainty. According to the World Gold Council, global central banks collectively bought 220 tons of gold in the third quarter of 2025, marking a 28% jump from the previous quarter. The buying spree comes even as gold prices hover near record highs, signaling that monetary authorities view gold as a strategic asset—not just a speculative one.
The National Bank of Kazakhstan emerged as the largest single buyer during the quarter, while Brazil’s central bank made a notable comeback to the market after a four-year hiatus. India’s gold reserves have surpassed the $100 billion mark for the first time, reaching $102.37 billion as of October 10, according to the Reserve Bank of India. The milestone comes despite a sharp slowdown in the central bank’s gold purchases this year, aided largely by a global price rally that has lifted bullion by about 65% in 2025.
Gold now accounts for 14.7% of India’s total foreign exchange reserves — the highest share since 1996-97 — nearly double its proportion a decade ago.
Neutral asset
Explaining the renewed appetite for gold, Alok Jain, founder of Weekend Investing, said that central banks are seeking a “neutral asset” that lies outside the control of any single government. “So far, that neutral asset was U.S. Treasuries,” he noted. “But with rising geopolitical tensions and growing distrust among nations, gold has replaced that requirement. It’s the one asset that no government can manipulate.”
In recent years, several global developments—from sanctions on Russia to rising trade tensions between major economies—have made central banks wary of overexposure to the U.S. dollar. As countries look to reduce dollar dependency and diversify reserves, gold has become the natural choice. Jain explained that while the global financial system may not be returning to a gold standard, “some form of sound money needs to come back because the current system of unlimited money printing and rising fiscal deficits is unsustainable.”
Fiat instability
For central banks, gold is more than just a portfolio diversifier—it’s a hedge against currency debasement. As major economies continue to expand their money supply to fund welfare schemes and maintain growth, the value of fiat currencies faces gradual erosion. “No politician wants to be tied down by the gold standard,” Jain said. “Printing money brings short-term popularity, but it erodes long-term stability. Central banks recognize this and are quietly preparing by building gold reserves.”
Gold rush
From a trading psychology perspective, Jain compared the central bank accumulation of gold to a contrarian investment strategy—buying when others are complacent. “In markets, most traders lose money by following herd behavior,” he said. “Similarly, central banks are acting in the opposite direction of short-term speculation. While retail traders chase quick gains in equities or crypto, central banks are focused on long-term stability.”
This contrarian approach underlines the broader mindset shift—from speculative risk-taking to risk management through tangible assets. The underlying message is clear: when trust in global systems weakens, gold regains its monetary relevance.
Industry analysts attribute the uptick in gold buying to mounting concerns over the stability of the US dollar and the search for safe-haven assets. Many central banks appear to view gold as a crucial hedge, especially in periods of heightened market volatility and currency risk. The World Gold Council emphasised that the recent increase in purchases demonstrates the metal’s enduring appeal, even as its price remains at historical peaks. The report indicates that official demand has played a significant role in supporting the overall gold market throughout 2025.
Looking ahead
The World Gold Council expects sustained buying momentum in the coming quarters, particularly from emerging markets in Asia and the Middle East. As global debt levels rise and fiscal deficits widen, central banks appear intent on securing assets that transcend national politics and monetary policy cycles.
In essence, gold has reasserted itself not merely as a commodity, but as the anchor of confidence in an increasingly uncertain world.