Why is there a rush to increase gold reserves? Find out what will happen next for gold prices.

By Samira Vishwas On Jan 24, 2026

Will Gold Price Increase: In recent years, gold has become more than just a precious metal. It has emerged as the most reliable indicator of global politics, war, and economic uncertainty. From investors to central banks around the world, everyone is now considering gold as a safe haven. India is a prime example of this, where our gold reserves, which were 661 tonnes in 2020, increased to 879 tonnes by 2025. This is not just India’s case. Many countries around the world are rapidly increasing the share of gold in their reserves. If we look at the trend of the last five years, gold has given very high returns.

This has set it apart from the stock market and other asset classes. The question now is why is this happening? Why do gold prices reach record highs whenever the world is experiencing war and instability? Is this simply a traditional belief, or are there deeper historical and political reasons behind it? Will gold prices continue to rise in the future, or is this surge only temporary? Let’s explore these factors in detail…

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Central banks are buying gold on a large scale

A major reason for the record rise in gold prices is the purchase by central banks.
Between 2022 and 2024, central banks around the world bought around 3200 tonnes of gold, with countries like Russia, China, India and Turkey leading the list.
These countries are gradually reducing the share of US dollar in their foreign exchange reserves and are giving priority to gold instead.
This clearly shows that the demand for gold is not only among the common people, but it is also an important part of the strategy of governments around the world.

Why is gold bought in times of uncertainty?

Whenever the world has faced war or any major crisis, gold prices have reached record highs.
In the 1970s, during the Iranian Revolution, the Soviet Union’s invasion of Afghanistan, and the Yom Kippur War, the prices of both gold and oil rose sharply.
Similarly, whether it was the Lehman Brothers financial crisis of 2008 or the Russia-Ukraine war of 2022, investors have preferred to turn to gold after every major volatile event.
In times of uncertainty, people look for assets that retain their value, and gold is one such asset.

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Bretton Woods and the Gold Story

Gold is closely linked to war and instability, dating back to the Bretton Woods Agreement of 1944.
After World War II, the United States held approximately 66 percent of the world’s gold reserves.
On the basis of this power, the dollar was made the world’s reserve currency, and every dollar was linked to the guarantee of gold.
This system established trust in the dollar worldwide.
For a long time, international trade was linked to the dollar and gold.

Nixon Shock

In 1971, there was a major change in the global financial system.
The then US President Richard Nixon delinked the dollar from gold, which is known as the Nixon Shock.
This decision gave America the freedom to print as much money as it wanted.
As a result, many countries began to lose confidence in the dollar.
During this period, from 1971 to 1980, the price of gold increased from $38 per ounce to approximately $636 per ounce.
This massive increase in just nine years shows why gold is considered a safe investment.
The biggest advantage of gold is that its price does not decrease even when the economy collapses.
That is why it is called safe haven.
During times of great instability such as the Gulf War, the Iraq crisis, the 9/11 attacks and the 2008 global financial crisis, investors preferred gold.