Growing official demand strengthens bullion’s role as reserve asset even as high interest rates weigh on spot prices.
Gold has overtaken U.S. Treasuries as the world’s largest reserve asset, marking a significant shift in how central banks are managing their foreign exchange reserves, according to new research highlighting continued official-sector demand for the precious metal.
The findings, based on the World Gold Council’s 2026 Central Bank Gold Reserves Survey, show that 89% of surveyed central banks expect global gold reserves to increase over the next 12 months. 74% anticipate the share of U.S. dollar holdings in global reserves will decline over the next five years.
The survey, which gathered responses from 76 central banks, reflects growing confidence in gold as a strategic reserve asset amid persistent geopolitical uncertainty, inflation concerns and efforts by many countries to diversify reserve portfolios. Central banks have purchased an average of 1,000 tonnes of gold annually over the past four years, roughly double the pace seen during the previous decade.
The trend comes despite weakness in spot gold prices during recent months. Higher U.S. interest rates, a stronger dollar and easing geopolitical tensions following the U.S.-Iran ceasefire have weighed on bullion prices. However, analysts note that long-term mining investments are typically based on multi-year price assumptions rather than short-term market fluctuations.
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According to the World Gold Council, reserve managers continue to value gold for its ability to preserve wealth during periods of financial stress, hedge against inflation and diversify national reserves. Nearly half of surveyed central banks also expect to increase their own gold holdings over the coming year, the highest proportion recorded since the survey began.
The shift also reflects broader concerns about reliance on dollar-denominated assets. Gold carries no credit or counterparty risk and cannot be frozen or sanctioned in the same manner as financial assets held abroad, making it increasingly attractive for reserve managers navigating geopolitical uncertainty.
For mining companies, sustained central bank demand could have significant implications. Higher long-term gold price assumptions improve project economics by increasing projected cash flows and net present value, making it easier for development-stage projects to attract financing even if near-term bullion prices remain volatile.
While economists expect monetary policy and Treasury yields to continue influencing short-term gold prices, the survey suggests official-sector demand remains a powerful structural force supporting the metal’s long-term outlook. With central banks continuing to diversify reserves away from traditional dollar assets, gold’s growing prominence appears likely to remain a defining feature of the global financial system.