Central Bank Gold Appetite Reaches New Peak as Global Risks Mount
RIYADH — A record 45 percent of central bank reserve managers expect to increase their gold holdings over the next 12 months, according to a World Gold Council survey that underscores bullion’s growing role as a strategic asset amid geopolitical tensions and concerns over dollar concentration.
The survey, conducted between February and May with responses received after the start of the Middle East conflict, also revealed that 93 percent of respondents already hold gold, up from 81 percent a year earlier. Geopolitical instability has overtaken inflation as the top reserve management concern, with 88 percent of respondents citing it as relevant.
Ahmed Azzam, head of market research at Equiti Group, told Arab News that the findings reflect a deeper institutional shift. “Gold is not being used to replace the dollar. It is being used to reduce the vulnerability that comes with relying too heavily on one reserve framework,” he said.
The survey also showed growing operational independence: 9 percent of central banks increased domestic gold storage over the past year, up from 5 percent, while 10 percent diversified overseas storage locations.
For the Gulf, where currency pegs and energy trade keep the dollar central, Azzam said gold offers a way to diversify risk without abandoning the dollar framework. “Over time, gold can become more than a line item in reserves. It can link reserve management with domestic market development, commodity infrastructure and financial-sector depth,” he said.
While central bank demand remains strong, consumer demand has weakened. Jewelry demand across the Gulf and wider Middle East fell 23 percent year‑on‑year in the first quarter of 2026 to 34.5 tonnes, hit by record prices and weaker purchasing power. Saudi Arabia showed relative resilience, with demand falling 13 percent to 12.7 tonnes.
Analysts say the central bank bid provides a structural floor for gold, but does not remove price volatility. “A structural buyer remains active, and that buyer is thinking in years rather than weeks,” Azzam said.
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