Gold Reserve Share Rise Not Driven by Sovereign Buying

The conventional wisdom on gold's reserve share says that central banks are buying up physical metal at an unprecedented pace, driving prices to record highs. However, this narrative may be based on a mathematical illusion.

The World Gold Council reports that gold's share of total official reserves has climbed to around 30% in 2026, from historical levels of 9-14%. This is often cited as evidence of aggressive sovereign buying. But the reality is more nuanced.

When reserve ratios rise, it can be due to two factors: an increase in physical accumulation or a price effect, where existing holdings gain value. The latter is the dominant driver here, with gold's 60% appreciation in 2025 alone causing its share of reserves to balloon.

A CPM Group analysis shows that the proportion of reserves held in non-US-dollar currencies contracted over the eight months preceding their analysis, partly because those currencies lost ground to the dollar. This means a rising reserve ratio can reflect currency dynamics and price appreciation almost entirely, with active buying playing a minor supporting role.