Why central banks buy gold decades after the gold standard ended
The US ended dollar-gold convertibility in 1971. Decades later, central banks buy gold at the fastest pace since Bretton Woods. We examine the paradox.
Gold Market
The US ended dollar-gold convertibility in 1971. Decades later, central banks buy gold at the fastest pace since Bretton Woods. We examine the paradox.
The Washington Agreement on Gold was a coordinated commitment by central banks to limit gold sales, aimed at stabilising the market and preserving the metal's monetary role.
Gold rose to a three-month high of $4,681 on Monday after US Treasury sanctions on Iran-linked entities. ETF inflows jumped. Focus turns to Fed Chair Warsh's speech at Jackson Hole.
Central bank gold buying is tracked through official reserves reports, surveys, and filings with the IMF and World Gold Council.
Central banks hold gold reserves for diversification, as a safe store of value independent of any government, and to manage geopolitical and financial risk.
Gold has climbed 9% from recent lows as investors and central banks rebuild positions. Lower oil prices and softer inflation support the metal, though stalled peace efforts and weak demand could limit gains.
Gold climbed to within striking distance of $4,400 an ounce as weaker US retail sales and consumer sentiment data dragged the dollar lower, making bullion cheaper for overseas buyers.
Chinese retail gold investment totalled 107 tonnes in Q2 2026, down from Q1's record but still the third-highest Q2 since 2010. When adjusted for a 29% rise in the local gold price, it set a new Q2 record.
Gold moved toward $4,400 an ounce after weaker US consumer sentiment and retail sales figures lowered the perceived risk of immediate Federal Reserve interest rate hikes.