# Gold Reserves Rise as Central Banks Bet on Geopolitical Risk
Central banks are still buying gold despite sharp price swings, according to a new survey covering reserve managers overseeing more than $9.5 trillion in assets. For Indian investors, the message is clear: official-sector demand for bullion remains firm even after gold’s historic rally, heightened volatility, and one of its biggest corrections in decades.
Why are central banks increasing gold reserves now?
Central banks are increasing gold reserves mainly because geopolitical risk has become their biggest macro concern. The latest survey shows that reserve managers want more diversification as wars, trade disruptions, and financial fragmentation reshape global markets.
According to a survey of 101 central banks conducted by Central Banking Publications and sponsored by HSBC, 72.6% of participants invest in gold. That is up from 69.4% in last year’s survey.
The survey also found that 15 central banks, or 15.8%, said they were currently buying gold. Another three central banks said they would look to increase their official gold reserves in the next five to 10 years.
Only eight central banks, or 8.4%, said they were not interested in investing in gold. That relatively small share highlights how strongly gold remains embedded in reserve management strategy.
For Indian investors, this matters because central bank buying often supports the long-term gold price floor. Strong official demand can cushion bullion during corrections and reinforce gold’s role as a safe-haven asset in global portfolios.
What does the survey say about geopolitical risk?
Geopolitical tensions are the top risk for central banks this year. Specifically, 69.7% of central banks said geopolitical tensions were their biggest concern.
The survey was first launched in January, and the final response was received on March 6, as the U.S.-Israel joint war on Iran continued to escalate. That timing is important because it captures reserve manager thinking during a period of active military and diplomatic stress.
A reserve manager at a central bank in the Middle East explained the concern directly: “Ongoing and emerging geopolitical conflicts are a major risk because they influence trade, capital flows, commodity prices and financial market correlations.”
That assessment is highly relevant for India. Any sustained rise in geopolitical risk can lift global gold prices, push up crude oil, and weaken emerging-market currencies. For Indian buyers, that can mean a double effect: higher international XAUUSD prices and additional upside in domestic gold rates if the rupee softens.
What is the central bank gold price outlook for 2026?
Central banks surveyed expect gold prices to remain elevated into 2026. Among the 60 central banks that provided a forecast, the mean estimate for gold at the end of 2026 was $5,354 per troy ounce.
That forecast shows that official reserve managers still see strategic value in bullion even after gold’s strong run and sharp correction. It also suggests that central banks do not view recent volatility as a reason to step away from the market.
For Indian investors, a gold price outlook of $5,354 per ounce is notable because it implies continued structural support for precious metals. If the U.S. dollar remains firm but global uncertainty stays elevated, domestic gold prices in India could still remain resilient, especially if INR weakens against the dollar.
Why does volatility not appear to be stopping central banks?
Volatility has not stopped central banks because they buy gold for reserve stability and diversification, not short-term trading alone. Gold serves as a hedge against geopolitical shocks, reserve-currency concentration, and systemic financial stress.
Bernard Altschuler, Global Head of Central Bank Coverage at HSBC, said the survey shows geopolitical risk is driving diversification across portfolios, counterparties, and asset locations. He added: “The survey highlights that geopolitical risk is resulting in diversification of portfolios, counterparties and location of assets. However, the US$ remains the dominant reserve currency with 78% of respondents predicting that de-dollarisation will be a gradual process. Gold is in focus, with 39% considering increasing holdings in the next year. The elevated price and volatility have also resulted in 37% planning to be more active in managing their gold reserves.”
That means central banks are not simply buying and holding. Many are also managing gold reserves more actively as higher bullion prices and wider swings create opportunities and risks.
How is the U.S. dollar’s reserve status affecting gold demand?
The U.S. dollar remains the dominant reserve currency, but confidence in its long-term role is being tested. That combination is helping keep gold in focus as a diversification asset.
The survey showed that 80% of respondents agreed or strongly agreed that the U.S. dollar is still the safe-haven currency. At the same time, nearly 16% said they were neutral, and another 4% said they disagreed that the greenback would remain the world’s reserve currency.
A reserve manager at a central bank in the Asia-Pacific region said: “Over the next five years, global FX reserve managers will rigorously assess whether the U.S. dollar’s role as the dominant global reserve currency will continue amid rising global fragmentation.”
The report also highlighted a comment from a reserve manager at a central bank in Europe, who said that investors’ “diminishing faith” in U.S. policies has affected the U.S. dollar.
Is de-dollarisation happening quickly?
No, the survey suggests de-dollarisation is expected to be gradual, not sudden. According to the report, 78% of respondents predicted that de-dollarisation would be a gradual process.
That distinction matters for the gold price. A slow shift away from the dollar does not remove the greenback’s reserve dominance overnight, but it can still encourage central banks to keep adding bullion over time.
For India, gradual de-dollarisation and higher gold allocations among central banks may support long-term demand trends. That backdrop is constructive for Indian households, sovereign reserve strategy discussions, and investors tracking gold as a hedge against currency volatility.
Are central banks buying silver or cryptocurrencies instead of gold?
Central banks show only modest interest in silver and very limited interest in cryptocurrencies compared with gold. The survey makes clear that bullion remains the preferred precious-metals reserve asset.
Two central banks, or 2.2%, said they own silver. Three central banks, or 3.4%, said they are currently considering investing in silver, while four, or 4.5%, said they would consider investing in the next five to 10 years.
By contrast, no participating central bank has invested in digital currencies. That is a striking result given the public debate around bitcoin, stablecoins, and reserve diversification.
Among 86 respondents, six central banks, or 7.0%, said they were considering investing in stablecoins in the next five to 10 years. Four out of 88 central banks said they were considering investing in other cryptocurrencies over that same time horizon.
The survey also showed that just over half of central banks are against a strategic bitcoin reserve fund. In other words, gold remains far ahead of digital assets in official reserve thinking.
What does this mean for Indian precious metals investors?
It means gold still has a stronger institutional foundation than silver or crypto in reserve management. Indian investors often compare bullion with bitcoin during periods of macro uncertainty, but this survey shows that central banks continue to trust gold far more than digital assets.
That does not make silver irrelevant. Silver still has industrial and monetary appeal. But based on this survey, official-sector accumulation remains overwhelmingly concentrated in gold, which strengthens its standing as the premier safe-haven precious metal.
What will matter most for reserve managers over the next five years?
Inflation and interest rates are expected to be the most important drivers of reserve management over the next five years. Geopolitical uncertainty is the top risk this year, but central banks see monetary conditions as the longer-run force shaping asset allocation.
That outlook matters for gold because inflation, real yields, and central bank rates directly influence bullion demand and XAUUSD pricing. If inflation stays sticky or rate cycles become unstable, reserve managers may keep using gold as a hedge.
For Indian investors, the key watchpoints are clear: central bank gold buying, the U.S. dollar’s reserve status, inflation trends, and global interest-rate expectations. If official demand stays firm and geopolitical stress remains elevated, gold prices could remain well supported globally and in India, especially when rupee weakness amplifies imported bullion costs.
