Central banks are increasingly entrusting their gold reserves to foreign custodians, with the Bank of England and the New York Fed serving as the top destinations for storage, according to a World Gold Council survey.
The survey found that 57% of responding central banks hold some gold at the Bank of England, making it the most widely used foreign depository. The New York Fed ranked second, with 14% of central banks storing gold there. Analysts attribute the preference to high liquidity, access to major settlement networks, and the ability to earn income through leasing arrangements. Additionally, dollar liquidity can be accessed via swaps without requiring physical gold bars to be recertified.
Central bank gold purchases surged in June, with 57 tonnes acquired, compared with a pre-2022 monthly average of 17 tonnes. China was the largest buyer, purchasing 40 tonnes. A further 32 tonnes of monetary gold entered London during the month, while foreign official holdings at the Bank of England rose by 98 tonnes. Analysts project average monthly central-bank purchases of 50 tonnes for the year.
Goldman Sachs estimates the metal could reach $4,900 per ounce by the end of 2026, citing sustained central-bank demand as a key driver. The bank highlights the risks of foreign storage, including frozen assets, as seen in disputes involving Venezuela’s gold held at the Bank of England in 2018 and the freezing of Russia’s reserves in 2022. Domestic storage, while offering control, imposes costs for security, audits, and insurance, alongside potential political or security vulnerabilities.
The trend toward diversifying reserve holdings reflects broader efforts to mitigate geopolitical and operational risks, with liquidity and market access remaining critical factors in custodian selection.
