Central Banks Turning to Gold Again
In recent years, there has been a clear shift in how countries are managing their reserves. Central banks across the world have started increasing their gold holdings once again.
Data shows that the share of gold in global reserves, excluding the United States, has been rising. Countries like India hold about 14 to 15% of their reserves in gold, while others such as France and Italy have much higher proportions. This trend marks a significant change after many years of low gold holdings.
A Double Boost for Gold’s Value
Two key factors are pushing gold reserves higher. First, central banks are actively buying more gold each year, increasing their total holdings. Second, the price of gold in US dollar terms has been moving up steadily. This means that even the gold already held by these banks is becoming more valuable. Together, these two tailwinds are giving gold a renewed importance in the world’s financial system.
History Repeats Itself with Renewed Strength
Looking back, gold once played a much bigger role in global reserves. Before 1990, central banks held over 40% of their reserves in gold, and during the peak of 1980, this number even touched 70%. Today, we are only around 23–24%, which suggests that there is still a lot of room for gold’s share to grow. The accumulation trend seen since 2018 could easily continue for several years before it slows down.
A Growing and Lasting Demand for Gold
Central banks have been buying around 1,000 tons of gold every year for the past few years. If this pace continues, the long-term demand will remain strong. Many people doubt gold when prices rise too quickly, but the current demand looks far from finished. As long as major financial players keep buying, this “gold rush” among central banks will continue to support higher prices for years to come.
The Private Market Could Add More Fuel
Another massive potential boost for gold comes from private investors. Reports suggest that the average global portfolio holds only about 1.5% in gold, while some big institutions recommend holding up to 20%. The global private wealth market is around $350 trillion. Even a small shift toward gold could mean trillions of new dollars flowing into it. Considering that all the gold ever mined is valued at around $30 trillion, such an inflow could push prices much higher.
A Long-Term Trend Worth Watching
While short-term price drops can happen, the overall trend for gold looks very strong. The mix of central bank demand, rising prices, and potential private investment creates a powerful long-term story. The global move toward gold is not just a temporary phase—it might be the beginning of a new golden era.
