Central banks (like China's PBOC, India's RBI, Poland's NBP, or Turkey's CBRT) buy gold to hold in their foreign reserves — the savings account of a country.
When a central bank buys gold, it usually means: they want to reduce dependence on the US dollar, they're worried about geopolitical risks, or they want a store of value that can't be frozen or sanctioned.
The 2022–2023 purchases of 1,000+ tonnes per year were the highest since the end of the gold standard.
How does it affect gold?
Central bank buying is the single most important structural driver of gold in the 2020s. When central banks buy in bulk, they create sustained, price-insensitive demand that supports the gold price regardless of what interest rates or the dollar are doing.
Think of it this way: a central bank buying 100 tonnes of gold doesn't care if gold went up 10% last month. They're buying for decades, not weeks.
Record central bank purchases in 2022–2023 are a primary reason why gold hit all-time highs despite high interest rates — a historically unusual combination.