Gold is increasingly being treated as a strategic safe haven by central banks, particularly across the BRICS group, as governments reassess their exposure to the US dollar and Western financial systems. According to analysis shared by Inside China Business, this shift reflects a long-term effort to diversify reserves amid inflation pressures, sanctions risk and geopolitical fragmentation.
BRICS countries account for a significant share of global gold production, with China and Russia among the world’s largest miners. Other members and partner states, including South Africa, Brazil, Kazakhstan and Uzbekistan, further reinforce the bloc’s role in the global gold supply. Despite this domestic production, central banks within these countries are also actively purchasing gold on international markets, adding to upward pressure on prices.
A key driver behind the move is concern over the safety of foreign exchange reserves held in dollars or euros. The freezing and seizure of Russian reserves held in Western banks following the Ukraine war has prompted many governments to question whether assets held abroad remain secure. Gold, by contrast, can be physically repatriated and held outside foreign jurisdictions, reducing exposure to potential asset freezes.
China has been central to this trend. The People’s Bank of China has added to its gold reserves for more than a year, while steadily reducing its holdings of US Treasury bonds. Although China traditionally trades gold at a discount due to high domestic supply, that gap has narrowed as global prices rise, driven by central bank demand, inflation expectations and geopolitical risk.
The strategy is not limited to BRICS. Emerging market central banks more broadly are reallocating trade surpluses away from US government debt and toward gold. Countries such as Brazil and South Korea have recently signalled renewed gold purchases after long pauses, reflecting a reassessment of reserve management in a more fragmented financial system.
At the same time, trade patterns are evolving. A growing share of commerce among BRICS countries is now settled in local currencies rather than routed through dollar-based systems. This reduces transaction costs while limiting exposure to sanctions and regulatory intervention.
Central banks are largely indifferent to short-term price movements. Surveys indicate that a strong majority plan to increase gold reserves further, viewing diversification away from the dollar as a structural necessity rather than a speculative bet. For investors, the trend highlights how monetary authorities are responding to inflation, geopolitical uncertainty and declining trust in the neutrality of Western finance.
Source: Inside China Business (@Inside_China_Business)
