Central Banks Expand Gold Reserves to Counter Geopolitical and Financial Risks
Central banks are increasingly viewing gold as a strategic asset to safeguard against geopolitical risks, financial instability, and declining confidence in traditional reserve assets. This shift was highlighted during a panel at the London Bullion Market Association’s annual Precious Metals Conference, where reserve managers from Europe, Africa, and Latin America discussed gold’s evolving role beyond being a simple inflation hedge or store of value.
A survey by UBS Asset Management revealed that 65% of respondents cited diversification as their primary reason for holding gold in 2026, with geopolitical risk management being another key factor. Tomasz Malkowski, Chief Dealer of FX and Gold at Narodowy Bank Polski, emphasized that gold serves as a pillar of stability and an anchor during financial market turbulence. Poland, for instance, has aggressively increased its gold reserves from 100 tonnes in 2018 to a target of 700 tonnes, aiming to diversify its reserve structure rather than replace euros or U.S. dollars.
Banca d’Italia’s Gioia Cellai highlighted gold’s historical usefulness during economic and political crises, noting that Italy pledged 500 tonnes of gold to Germany’s Bundesbank in 1974 to secure a $2 billion loan. She described gold as a powerful diversifier and safe-haven asset, currently representing roughly 30% of Banca d’Italia’s assets in 2025. Meanwhile, Ghana’s Domestic Gold Purchase Program has significantly boosted the country’s reserves, with purchases increasing from 3.47 tonnes in 2022 to 110 tonnes in 2025, strengthening economic resilience and stabilizing inflation.
The panel also underscored gold’s appeal as an asset with no liability, particularly in a geopolitically fragmented world. Cellai noted that gold’s physical nature makes it less vulnerable to sanctions, a lesson reinforced by Russia’s experience with frozen foreign reserves. Despite concerns about the dollar-based monetary system, central banks are gradually diversifying their reserves, with nearly 90% of LBMA conference attendees expecting continued or accelerated gold purchases in the next five years.