Gold in a Changing Reserve Landscape

In this time of turbulence, there’s been no shortage of debate around what actually constitutes a credible reserve asset, whether through the lens of safe-haven demand or traditional definitions of safety. One asset that continues to draw attention in that discussion is gold. Not because the arguments around it have been settled, but because the behavior of its price in this environment has been hard to ignore. Gold still doesn’t generate income, its track record as a clean inflation hedge is mixed and it lacks the investment flexibility of government bonds. However, demand for gold has held up remarkably well¹ and questions about its role continue to surface in conversations about reserve management.²

Gold’s recent rise is happening alongside a broader rethink around de-dollarization and US Treasuries (USTs) as a safe haven. For decades, USTs sat at the top of the reserve-asset food chain, backed by depth, liquidity and institutional credibility. That foundation is still there, but it’s being tested more often and in different ways. Rate volatility is higher, UST issuance is heavier and the weaponization of the dollar, alongside the use of sanctions, has introduced new layers of uncertainty around access to reserves. The question for central banks is no longer just about return or liquidity; it’s about resilience, including scenarios where market functioning or access to reserves becomes impaired.

Within that context, data from the World Gold Council shows that official sector demand has continued to rise in early 2026, with central banks adding roughly 30 tonnes year to date following record annual purchases of over 1,000 tonnes in each of the past two years. The pace has moderated compared to the surge seen in prior years, but the direction hasn’t reversed. Countries such as Poland, Uzbekistan and Kazakhstan have continued to add to their holdings, reflecting an ongoing effort to diversify reserve portfolios.³ At the same time, China has extended a steady accumulation trend, increasing its gold reserves for 17 consecutive months even as prices have fluctuated.⁴

There have also been notable sales, but those require careful interpretation. Turkey reduced its gold reserves in the two weeks following the start of the Iran conflict, using gold along with foreign exchange reserves to stabilize domestic conditions.⁵ Russia has also reported periods of reduction, tied to liquidity needs and portfolio adjustments. These moves have prompted some questions about whether the broader trend of central bank gold accumulation is beginning to fade.

What stands out more clearly is the delineation between tactical and strategic behavior. From a strategic perspective, central banks view gold as a long-term store of value and a hedge against a more fragmented global financial system. It can uniquely provide diversification that isn’t tied to any single issuer, currency or financial system.

From a tactical perspective, central banks typically sell gold in periods of stress to raise liquidity, defend currencies or smooth market functioning, but that doesn’t undermine the strategic case for holding gold. If anything, it highlights gold’s utility as a reserve asset that can be mobilized when needed, rather than simply held passively.

For small and mid-sized central banks—particularly in emerging markets that are more vulnerable to economic, financial and geopolitical shocks—the recent experience of Turkey is worth paying close attention to. In the span of a few weeks, Turkish officials were able to mobilize tens of tonnes of gold, in some cases through swaps rather than outright sales, to generate liquidity.⁶ That kind of flexibility doesn’t come from holding gold passively; rather, it reflects prior decisions around allocation, custody and market access that were made well before the stress event.

For institutions where gold doesn’t yet play a clearly defined role, the starting point is less about making a directional call and more about whether the operational framework exists to use it if needed. Even a modest allocation, combined with the ability to mobilize it efficiently, can expand the set of policy tools available during periods of stress.

Looking ahead, the underlying support for gold demand still looks intact. According to a survey conducted between January and March 2026 of almost 100 institutions managing reserves over $9.5 billion in size, central banks continue to prioritize diversification and are seeking greater exposure to gold, particularly with geopolitical risk running high and the security of reserves now top of mind.⁷ The opportunity cost of holding gold is also less prohibitive in a world where real yields are volatile and not consistently attractive across global real rate curves. Together, these factors continue to support gold’s role within reserve portfolios.

More broadly, reserve assets are in flux. USTs remain central to the system, but they’re no longer viewed as risk-free in the same way, particularly when rate volatility can be significant even over short horizons. The US dollar continues to dominate, yet it faces incremental headwinds tied to fiscal dynamics and geopolitical positioning. High-grade credit markets offer limited alternatives, especially with spreads near historically tight levels, in many cases hovering close to cycle lows. Beyond these traditional instruments, the pool of scalable, liquid assets remains limited.

In closing, central banks are navigating a more complex set of trade-offs. Liquidity and capital preservation remain the core objectives, but the tools to achieve them are evolving as traditional reserve assets become more volatile and alternatives remain limited. In that context, gold’s appeal is unlikely to fade, particularly as the definition of safety itself continues to be tested.

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