Key facts
- Gold-producing countries are increasingly refining and holding onto their own gold instead of exporting it.
- This shift is driven by declining confidence in the US dollar and concerns over asset freezes due to sanctions.
- Laos aims to refine local gold domestically and increase its share in FX reserves.
- Indonesia will implement an export tax of up to 15% on gold starting in 2026.
- China's non-monetary gold imports rose 80% year-on-year to 997 tonnes between January and July.
- Central banks are buying gold, with Goldman Sachs estimating monthly purchases around 91 tonnes on a three-month seasonally adjusted basis.
Gold-producing nations are increasingly retaining their own gold rather than exporting it, a shift that could support higher prices. This trend, described by Nikkei Asia as a "new form of resource nationalism," is driven by a loss of confidence in the US dollar as the world's reserve currency and concerns over asset freezes under sanctions.
Historically, gold mined in emerging markets was largely exported, often as raw ore, to be refined in Western centers like London and New York. However, countries like Laos, Indonesia, and China are now establishing domestic refining capabilities and implementing policies to capture more value from their gold production. Laos, for instance, set up the Lao Bullion Bank in 2024 with the aim of refining local gold and increasing its contribution to the country's foreign exchange reserves. Indonesia announced an export tax of up to 15% on gold, effective in 2026, to meet local investment demand.
China, the world's largest gold producer, restricts exports and is a significant importer. Analyst Jeff Toshima noted that taking gold out of the country is generally restricted. Madagascar's central bank has been purchasing domestically produced gold since the early 2020s as part of its reserve diversification strategy, while Ghana is working to ensure its communities and nation benefit from its gold resources.
This redirection of gold flows away from Western refiners is attributed to the freezing of Russia's foreign exchange reserves by the US and its allies in 2022. This event prompted many countries to view gold as a reserve asset insulated from political and fiscal policies of any single nation. Data indicates a decline in the dollar's share of global foreign exchange reserves, with central bank managers expecting gold to play a larger role.
Central banks, including China's, have been increasing their gold holdings. While official figures show China's central bank adding 20 tonnes in August, marking 22 consecutive months of purchases, estimates from Goldman Sachs suggest actual monthly central bank buying is significantly higher. China's non-monetary gold imports have also surged. This increased demand from both official and private sectors in China is seen as a key factor supporting gold prices, offsetting drops in imports by other nations like India and ETF selling outside China.