Central Banks Tap Gold Reserves to Shore Up Currencies

Several central banks have sold portions of their gold reserves to raise foreign-currency liquidity and support weakening national currencies after oil prices rose following the Iran conflict. Turkey reduced official gold holdings by about 131 tons in March through swaps and direct sales. Spot gold has fallen roughly 10% from its late-January peak.

Data from Metals Focus shows Turkey cut 131 tons in March as authorities sought to steady the lira, which has slipped about 1.7% against the U.S. dollar since the conflict began and recently reached new lows. Russia trimmed its gold holdings in recent months. Ghana sold reserves to boost foreign-currency liquidity. Poland’s central bank governor briefly considered selling part of the country’s gold stockpile to help finance higher defense spending.

Higher oil prices increase import bills for many countries and put pressure on exchange rates. When local currencies weaken, monetary authorities can intervene in foreign-exchange markets to defend them. Quick access to cash can require using reserve assets; gold is among the largest reserve assets that can be mobilized rapidly. A stronger U.S. dollar and higher global borrowing costs have also raised the expense of external financing for countries with weaker currencies.

Central-bank buying of gold was strong from 2022 through 2024, with purchases exceeding 1,000 tons a year and 2022 the largest year on record for official gold demand. That pace slowed to about 863 tons in 2025 as price swings increased. Major reserve holders such as the Reserve Bank of India, the People’s Bank of China and Germany’s Bundesbank have not commented on recent activity.

Market reaction has pushed bullion prices lower. Spot gold traded around $4,838 per ounce, down about 10% from its late-January high. Silver was near $79.40 per ounce, platinum about $2,119.52 and palladium around $1,570.10. Retail investors have been reducing exposure to gold funds.

Shaokai Fan, global head of central banks at the World Gold Council, said, “It really emphasizes why central banks hold gold… it’s a liquid asset that typically performs well during periods of uncertainty, and therefore they can deploy it if needed.” Austan Goolsbee, president of the Federal Reserve Bank of Chicago, warned that the Fed may need to wait until 2027 to begin cutting interest rates if oil-driven inflation keeps progress toward the central bank’s 2% goal slow. Markets assign roughly a 32% chance to a U.S. rate cut this year.

Countries that import energy and face tighter external financing have turned to reserve sales, including gold, as a way to secure foreign-exchange liquidity and support their currencies.