Central banks increase gold purchases amid Middle East conflicts

In May 2025, global central banks purchased 20 tonnes of gold as tensions escalated in the Middle East. This rise in gold buying marked an increase from the previous month's total of 12 tonnes but remained lower than the 12-month average of 27 tonnes. The World Gold Council attributed this trend to the geopolitical instability in the region, which has prompted central banks to view gold as a strategic asset for safeguarding their reserves against potential shocks. Factors such as military actions in Europe, ongoing conflicts in the Middle East, and concerns over trade tariffs have significantly increased gold demand in recent years. As central banks diversify their holdings away from the US dollar and towards gold bullion, they have collectively bought an impressive 1,000 tonnes of gold annually for the past three years, a significant rise from the 400 to 500 tonnes seen in the previous decade. The WGC reported that participation levels among central banks in this trend are reflected in a survey where 95% of respondents anticipate an increase in global central bank reserves within the next year. This figure represented a rise from 81% in 2024 and indicated a growing confidence in gold as a safe-haven asset. Among the significant buyers in May were the National Bank of Kazakhstan, which acquired seven tonnes of gold, thereby increasing its total holdings to 299 tonnes. Meanwhile, both the Central Bank of Turkey and the National Bank of Poland purchased six tonnes each, with the latter emerging as the largest net purchaser of gold for 2025 to date. Other notable buyers included the People’s Bank of China and the Czech National Bank, which each added two tonnes, while several smaller institutions purchased one tonne. On the selling side, the Central Bank of the Republic of Uzbekistan and the Deutsche Bundesbank each sold one tonne, with Uzbekistan topping the list for the year by selling a total of 27 tonnes. Singapore ranked second in gold sales, offloading 10 tonnes. The fluctuations in both purchasing and selling activities highlight a renewed focus on gold amid a tumultuous geopolitical landscape, as central banks adapt to uncertainties in financial markets and global economics.