Central Banks Could Buy 20,000 Tonnes of Gold: BofA

Central banks may have significant capacity to continue buying gold even after several years of record demand, according to Bank of America (BofA). The bank estimates that institutions currently underweight in gold could require more than 20,000 tonnes to reach what it considers an efficient reserve allocation.

Central-bank gold purchases have become a major force in the bullion market since Russia’s invasion of Ukraine in February 2022. Annual purchases have recently exceeded 1,000 tonnes, helping fuel gold’s three-year bull market as governments increasingly diversify their foreign exchange reserves.

BofA’s analysis assumes gold should represent about 30% of total central-bank reserve assets. Its commodities team estimates this allocation would maximize the information ratio of an average central-bank portfolio.

Across all central banks, reaching the 30% benchmark would require purchases of nearly 2,300 tonnes of gold, equivalent to roughly two years of demand at the recent buying pace.

However, the potential rises dramatically when central banks already holding at least 30% of their reserves in gold are removed from the calculation. BofA estimates the remaining institutions would need approximately 20,333 tonnes, representing more than two decades of purchases at current rates.

China has the largest estimated gold shortfall among central banks below the 30% threshold. BofA calculates that China would need another 5,628 tonnes, while Japan would require 1,866 tonnes and Switzerland 1,192 tonnes. Taiwan, South Korea, Saudi Arabia and Singapore would each need more than 700 tonnes.

World Gold Council data show official global gold reserves currently stand at approximately 36,705 tonnes. Central banks made record net purchases of 1,092 tonnes in 2024.

Türkiye has emerged as the largest buyer since March 2022, accumulating 815 tonnes, followed closely by Poland with 808 tonnes. Meanwhile, selling has remained comparatively limited, led by Sri Lanka at 387 tonnes and Suriname at 265 tonnes.

BofA believes the substantial gap between current gold holdings and potential reserve allocations could provide long-term support for bullion prices, particularly if central banks continue diversifying away from traditional reserve assets.