Central Banks' Gold Buying Spree Continues Amid War, Inflation

The gold standard has seen a resurgence in recent years, driven by central bank purchases. For decades, central banks sold off their gold reserves, but this trend reversed in 2011 with the passage of the Budget Control Act.

Since then, net central bank buying has averaged around 500 metric tons per year, doubling to over 1,000 tons annually from 2022 to 2024. Last year saw a decrease to 850 tons, but the World Gold Council reports that central banks remain on track for another strong year of gold buying.

The main drivers of this trend are the war in Ukraine and inflation caused by President Biden's stimulus programs. Central banks' preference for gold is clear: China's central bank bought $5.7 billion worth of gold in the first five months of 2026, mostly in the second quarter when prices consolidated near $4,000.

This constant flow of buying has put a floor under gold prices and created an unofficial 'stealth' gold standard as nations swap dollars for gold. The dollar's share of global foreign exchange reserves has fallen from 72% in 2000 to around 58%, while gold's share has risen to 24%, eclipsing US Treasury bonds.