When Central Banks Sell Gold

5 min read

For four years the story of central banks and gold has been one of steady buying. This week the World Gold Council confirmed a break in that pattern. In March, after ten straight months of buying, central banks as a group sold more gold than they bought. The headline sounds alarming. The detail tells a very different story. It is one every holder of gold should understand, because it shows what gold is actually for.

The March numbers

According to the World Gold Council, central banks were net sellers of 30 tonnes of gold in March. The selling was concentrated in a small number of countries, mainly Turkey with Russia also reducing its holdings. We described Turkey's sales as they happened in Why Gold Fell in a War. Its central bank used gold to defend the lira as the war in neighbouring Iran shook its economy. Russia has been selling gold to raise money as its own budget comes under strain.

Look at the first quarter as a whole and the picture changes. The World Gold Council's latest Gold Demand Trends report shows central banks added a net 244 tonnes between January and March. That is 3% more than in the same quarter last year, despite 115 tonnes of reported sales.

Turkey: a reserve put to work

Turkey's central bank held around 603 tonnes of gold at the end of January, according to World Gold Council data. In the two weeks after the war began, its reserves fell by close to 59 tonnes. Some of that gold was sold outright. Most was used in swap agreements, where gold is exchanged for foreign currency or lira with a commitment to buy it back later.

This is not the first time Turkey has leaned on its gold. Between March and May 2023 it sold 159 tonnes, as record inflation and strong demand for gold at home widened the country's current account deficit. In that case the central bank sold gold to its own citizens to ease the pressure. It then rebuilt its reserves, which had recovered by the middle of 2025.

That history matters. Turkey sells gold when it must and buys it back when it can. That is the behaviour of an institution that values gold highly, not one that has lost faith in it.

Russia: a budget under strain

Russia's selling has a different cause. Its central bank sold about 15 tonnes of gold in January and February alone. World Gold Council figures show that was the largest drawdown of its kind since 2002. The sales are linked to the country's National Wealth Fund, which is being used to cover gaps in the budget as the pressure on public finances grows.

There is a further reason. Western sanctions froze around $300 billion of Russia's assets held abroad in 2022. Gold held at home could not be frozen. It is now one of the few reserves Russia can still turn into money freely. Its gold holdings have fallen to their lowest level since March 2022, but they are still being used for the purpose they were built for.

Selling from need, buying by design

The difference between the sellers and the buyers is the whole story. Turkey and Russia sold because they needed hard money in a hurry. One was defending its currency. The other was funding a war. Neither sold because it had lost faith in gold. They sold because gold was the most dependable thing they had.

The buyers, meanwhile, kept to their plans. Poland added 31 tonnes in the quarter and is working towards a target of 700 tonnes. Uzbekistan added 25 tonnes and Kazakhstan 12. China reported another 7 tonnes, taking its declared reserves to 2,313 tonnes. As the World Gold Council put it, continued buying against this backdrop "underscores the broadly strategic nature of their purchases".

We looked at this long-term buying in Central Banks Are Buying Gold at Historic Levels and at the leading buyers in China, Poland and the Global Race for Gold. Neither picture has changed. If anything, March showed why these countries want gold in the first place.

Gold as a reserve you can actually use

A reserve asset has one purpose. It must be there and worth something when everything else is under pressure. Turkey could not defend the lira by printing more lira. It needed something the rest of the world would accept without question. Gold met that test within days.

Russia's experience makes the same point from the other side. Reserves held in another country's banking system turned out to be reserves in name only once sanctions arrived. Gold in its own vaults remained usable. Every central bank watching has taken note, which is why so many continue to add gold even in a month when a few are selling.

That is the quiet lesson for private savers too. Gold is not only something to hold through calm years. It is the asset that still has a buyer on the worst day. The ability to sell is part of what gives it value, even for those who never intend to.

What a household can learn from it

A family is not a central bank, but the logic carries over well. Most households keep cash for everyday bills. Many also want something in reserve that does not depend on a bank, a platform or a government decision. Turkey and Russia have just shown what that reserve looks like in practice. It is something you can turn into money quickly, on your own terms, when other options are closed.

That is one reason many owners choose a number of smaller coins rather than one large piece. A single coin can be sold to meet a need while the rest stays put. Central banks did exactly that in March. They used part of their gold and kept the rest. After 2023, Turkey showed that it rebuilds what it uses.

Private buyers stepped up

While a few central banks sold, private buyers did the opposite. Private demand for physical gold reached 474 tonnes in the first quarter, up 42% on a year earlier and the second highest quarter on record. Total gold demand reached a record value of $193 billion. Back in July 2024 we wrote about the quiet buyer and what central bank behaviour tells you. The same is true of ordinary savers. Their actions in a falling market say more than any forecast.

Where April left gold

Gold eased again in April, falling around 3% for its second monthly decline in a row. A two-week ceasefire between the United States and Iran began on 8 April, though talks stalled. The Federal Reserve held its rate at 3.5% to 3.75% on 29 April, with four members dissenting. The Bank of England held Bank Rate at 3.75%. Oil remains high and markets now expect rates to stay where they are for some time.

For savers in Britain, the tax position is unchanged. UK legal tender gold coins such as the Britannia and the Sovereign are exempt from Capital Gains Tax for UK residents, because they are sterling currency. Gold bars do not share this advantage. Central banks buy gold for strength and sell it in emergencies. Either way, they treat it as real money.

Speak to a specialist

If you would like to talk it through, call a specialist on 0208 064 0076, Monday to Friday, 9am to 5pm, or book a call at a time that suits you.

Book a call

Sources

This article is for information only. The value of gold can go down as well as up.

Back to blog

Gold Insights are independent articles, researched and written by our own team at Gold Tier Advisory.