Central bank gold buying has slowed significantly in the last few months. However, analysts at Metals Focus think this is a temporary reaction to current factors and not the beginning of a new trend.
Demand from central banks was a key factor driving the gold price up over the last few years.
While central bank gold purchases declined to 863.3 tonnes last year, they were still well above the 2010-2021 annual average of 473 tonnes.
In fact, 2025 was the fourth-largest expansion of central bank gold reserves on record. The all-time high was set in 2022 (1,136 tonnes). It was the highest level of net purchases on record, dating back to 1950, including since the suspension of dollar convertibility into gold in 1971.
In January, the gold price spiked to well over $5,000. Since then, there have been significant price pressures due to uncertainty created by the Iran conflict and worries about a surge of price inflation. As Metals Focus noted, gold sales by central banks, along with reports of “potential further disposals,” have also weighed on investor sentiment.
However,
Metals Focus Ltd
analysts said the selling is likely temporary.
“Indeed, even accounting for these sales, provisional data suggest that the official sector has remained a net bullion buyer this year-to-date. Elevated geopolitical risks should, if anything, reinforce the case for central banks to hold gold as a means of diversifying away from dollar-denominated assets.”
Turkey Leads Sellers
As we reported recently, Turkey has sold a significant amount of gold over the last month to support the lira.
According to data analyzed by Bloomberg, Turkish gold reserves showed a 6-tonne decline during the week of March 13 and 52.4 tonnes the following week. Based on Metals Focus data, Turkish gold reserves have declined another 79 tonnes since then, bringing total sales to 131 tonnes.
Rising energy prices due to the war are straining the Turkish central bank’s ability to maintain its strategy of slow lira depreciation. As energy prices rise, it increases demand for dollars (given that most oil contracts are priced in the U.S. currency). This increases the downward pressure on the lira. By selling gold and intervening with dollars, the Turkish central bank can maintain lira strength.
More than half of the decline in Turkish gold reserves was the result of gold swaps. As Bloomberg noted, “It’s not uncommon for central banks to sell spot gold and simultaneously agree to buy it back in the future via swap agreements, effectively granting them cheap dollar funding using the precious metal as collateral.”
Meanwhile, Russia has been selling gold to support its economy as it struggles against aggressive sanctions due to its invasion of Ukraine. It sold 9 tonnes of gold in January and another 6 tonnes in February.
According to Metals Focus, “These sales are believed to involve the National Wealth Fund (NWF), with gold assets liquidated to help finance budget shortfalls.”
Ghana started selling gold before the chaos of the U.S.-Israel attack on Iran. The African nation’s gold reserves dropped nearly 50 percent from 38 to 19 tonnes between October and December of last year. Officials said the sales were for “portfolio rebalancing.” With the price of gold surging, gold exceeded 40 percent of the country’s total reserves.
Metals Focus put the changes in Ghana’s reserves into perspective.
“Purchasing domestic mine output and subsequently selling gold is not uncommon among central banks in gold-producing countries. Kazakhstan and Uzbekistan are notable examples, having been active on both sides of the market in recent years, albeit with a bias towards net accumulation. Looking ahead, as Ghana plans to expand purchases of domestically mined gold, more frequent two-way activity is likely.”
Poland has hinted at selling some of its gold holdings to finance defense spending. The country led all central banks last year, adding 102 tonnes to its reserves.
However, despite rumors that it might tap into its gold reserves, Poland was the biggest buyer in February, expanding its reserves by another 20 tonnes. This lifted the country’s gold reserves to 570 tonnes, making up 31 percent of its total reserves.
The Case for Expanding Gold Reserves Remains Intact
Looking ahead, even with a shaky ceasefire in place, uncertainty surrounding actions in Iran will likely continue. This will probably keep energy prices high and volatile over the next few months. Given this scenario, Metals Focus analysts said they cannot rule out more central bank gold selling and swaps to raise liquidity and support economies.
However, Metals Focus called these “short-term dynamics” and insisted that “the case for [central bank] portfolio diversification into gold remains intact, particularly for countries that are still underweight.”
In fact, the conflict with Iran could exacerbate some of the dynamics that have driven central bank gold buying over the last few years, particularly concerns about the weaponization of the dollar and the United States’s borrowing and spending problem.
“If anything, the Iran conflict, alongside U.S. intervention in Venezuela, may signal a shift towards a more unilateral U.S. foreign policy stance, potentially amplifying geopolitical uncertainty in the years ahead. Combined with a deteriorating fiscal outlook across key economies and concerns over central bank independence, this should continue to enhance gold’s appeal as a portfolio diversifier.”
Originally Published on Money Metals.