Central banks hold largest gold reserves ever

At the end of 2021, the world’s central banks held 35,516 tonnes of gold as part of their foreign currency reserves – the largest holdings since the turn of the millennium. In the first nine months of this year, central banks added to these holdings. In Q3 2022 alone, the already enormous gold reserves were expanded by almost 400 tonnes compared to the same quarter of the previous year, a record number at more than three times the amount of Q3 2021.

More gold holdings than during Bretton Woods system

This year’s increase is not just an absolute high – the total gold reserves in 2022 are also at a record level. Recent World Gold Council data from early December shows that they stood at 36,745.8 tonnes, unprecedented in the history of gold reserves. Even in 1970, during the gold standard modified by the Bretton Woods Agreement, global gold reserves were at a lower 36,606 tonnes and declined significantly in the decades following, until sharply resurging in the 2010s.

Gold the bulk of foreign currency reserves for many central banks

The importance central banks attach to gold as a hedge against inflation and store of value is evident in absolute gold holdings and purchases as well as their share in a country’s total foreign currency reserves. The US traditionally tops the list, with 65.9 per cent of its total reserves consisting of gold, corresponding to 8,133.5 tonnes, followed by European countries such as Germany with 64.9 per cent or 3,355.1 tonnes, Italy with a gold share of 62.2 per cent of total reserves, which corresponds to 2,451.8 tonnes, and France with 1,436.8 tonnes or a gold share of 57 per cent. Incidentally, the highest share of gold in foreign currency reserves worldwide is held by the Portuguese central bank with 69.6 per cent, which, however, amounts to a comparatively modest 382.6 tonnes.