Gold rally doubles African reserves as central banks seek dollar alternatives

….gold reserves rise by 114% in three years

African countries are seeing the value of their gold reserves surge as international bullion prices climb, strengthening central banks’ balance sheets and renewing interest in gold as an alternative to dollar-denominated assets amid currency volatility and global economic uncertainty.

The combined dollar value of gold reserves, based on available data for eight African countries, increased by 113.5 percent to $66.6 billion in the second quarter of 2026 from $31.2 billion in the same period of 2023, according to a BusinessDay analysis of World Gold Council data.

The eight countries tracked are South Africa, Nigeria, Ghana, Mauritius, Algeria, Egypt, Morocco and Kenya. However, the increase in value has not been matched by a comparable rise in the amount of gold held.

Physical gold holdings across the eight countries edged up to 509.2 tonnes in Q2 from 505 tonnes three years earlier, suggesting that higher international gold prices accounted for most of the increase in their reserves’ dollar value.

Gold averaged about $1,955 per troy ounce in 2023, compared with around $4,166 recently, more than doubling in value. The rally has significantly increased the dollar value of African central banks’ gold reserves, even as the physical quantity held across the eight countries tracked remained broadly stable.

The figures show that the gold rally is increasing the value of African central banks’ existing holdings as governments look to diversify reserve assets, strengthen external buffers and reduce exposure to currency and geopolitical risks and improve the value of their currencies.

Algeria recorded the largest gold reserves by value at $22.5 billion, followed by Egypt at $16.8 billion and South Africa at $16.3 billion.

The combined gold reserves accounted for 20.6 percent of the countries’ reported gross reserves of $322.6 billion in Q2. This compares with the 10 percent in the second quarter of 2023.

The rising share underscores gold’s growing financial significance, although the data alone does not show that all eight countries deliberately increased gold purchases or reduced their dollar holdings.

Gold has gained prominence among central banks because it is not a liability of another government or financial institution. It can provide diversification within reserve portfolios and serve as a store of value during periods of geopolitical uncertainty. Unlike foreign-currency securities, however, gold does not generate interest income, and its market price can fluctuate substantially.

“Over the past several years, central banks have steadily increased their gold holdings, continuing to buy even as bullion reached historic highs,” Alan Goldberg, lead data analyst at BestBrokers, a financial research and comparison platform, said in an email to BusinessDay.

“This suggests that governments are not simply chasing returns, but reassessing the role of gold in a world shaped by geopolitical uncertainty, shifting currency dynamics and concerns over financial resilience,” he said.

Gold prices lift reserve values

The rally in international gold prices has created a substantial valuation gain for countries holding the metal. Gold prices rose sharply during 2025 and climbed above $5,400 an ounce in January 2026 before retreating to around $4,100 in early October, according to figures from World Gold Council.

Although the correction has reduced prices from their peak, gold remains an important focus for central banks and investors amid changing interest-rate expectations, geopolitical tensions and uncertainty in global markets.

The price increase is particularly significant for countries whose central banks already hold substantial quantities of gold. When bullion prices rise, the dollar value of those holdings increases even if the quantity stored in central-bank vaults remains unchanged.

That distinction is important for African economies. A higher valuation can strengthen the reported value of reserve assets and improve the proportion represented by gold, but it does not necessarily mean a central bank has acquired more metal or has additional liquid dollars available to finance imports and service external debt.

The World Gold Council has reported sustained demand from central banks globally. Its annual survey found that 89 percent of respondents expected global official gold reserves to increase over the following 12 months, while 45 percent expected their own institutions’ holdings to rise.

Meanwhile, 74 percent of respondents expected the US dollar to account for a moderately or significantly smaller share of global reserves over the next five years.

Ghana, Tanzania build domestic gold programmes

While higher international prices explain much of the increase in the combined value of gold reserves, some African countries have also adopted programmes designed to channel domestic production into reserve accumulation or foreign-exchange earnings.

Ghana recorded the fastest increase in the dollar value of gold reserves among the countries tracked, with holdings rising from $634 million in Q2 2023 to $3.65 billion in Q2 this year, an increase of 476 percent.

The West African country has increasingly used its gold resources to strengthen external buffers and generate foreign exchange following a period of economic and currency pressures. Thanks to the surge in gold prices, it became Africa’s best performing currency against the US dollar last year.

Ghana’s gold-purchasing framework distinguishes between metal acquired from large-scale mines and gold sourced from artisanal production. Under the Ghana Gold Reserve Act Programme, adopted in February, gold acquired from large mines is intended to be added to physical reserves, with sales subject to government and parliamentary approval.

Artisanal gold is collected through GoldBod and can be marketed to generate foreign currency for transfer to the Bank of Ghana. This gives gold two distinct functions: strengthening long-term reserve holdings and providing a means of obtaining foreign exchange.

Tanzania has also expanded its holdings through a domestic gold-purchasing programme launched in September 2023. The Bank of Tanzania had accumulated 27.5 tonnes by June 2026, according to the supplied data, after a long period in which it did not add to its gold reserves.

Uganda launched a pilot programme in April 2026 under which gold is stored at the central bank before being incorporated into official reserves.

Zimbabwe has taken a different approach by linking gold to its currency framework. The Zimbabwe Gold currency, introduced in April 2024, is backed by a combination of gold and foreign-exchange reserves. The central bank’s gold holdings increased from 1.5 tonnes when the currency was launched to 4.03 tonnes at the end of 2025.

These initiatives show that gold accumulation across Africa is not driven by a single objective. Some countries seek to diversify reserves, others aim to generate foreign exchange from domestic production, while some use gold as part of a broader monetary framework.

Nigeria and South Africa among major holders

Nigeria’s gold reserves increased in dollar value from $1.31 billion to $2.79 billion, while South Africa’s holdings rose from $7.71 billion to $16.3 billion.

Egypt’s gold reserves increased by 117 percent while Algeria’s rose 110 percent. Mauritius’ holdings grew by 111 percent while Morocco’s rose by 110 percent.

For Nigeria, gold offers a potential source of diversification in an economy where foreign-exchange earnings have historically depended heavily on crude oil exports. But gold cannot replace the liquid foreign-currency reserves needed to pay for imports, meet external obligations and support foreign-exchange market operations.

Kenya’s reported gold reserves fell from $1.8 billion in the second quarter of 2025 to zero in the second quarter of 2026.

Gold alone cannot stabilise currencies

For African economies facing currency depreciation and imported inflation, a stronger reserve position can help support confidence in their ability to meet external payment obligations. But a rise in gold prices does not automatically strengthen a currency or reduce domestic inflation.

Exchange rates also depend on export earnings, capital flows, monetary and fiscal policy, external debt obligations and investor confidence. Gold can provide diversification and a store of value, but it does not generate the same immediate foreign-exchange liquidity as cash and readily marketable foreign-currency securities.

Joseph Nnanna, chief economist at the Development Bank of Nigeria, told BusinessDay recently that African countries must build stronger value chains around gold rather than exporting raw resources.

“Gold, like any other natural resource, can only deliver sustainable value when it is processed along a full value chain,” he said. “Building strong value chains is essential for achieving sustainable economic growth.”

For African governments, the challenge is therefore twofold: managing gold as a reserve asset while ensuring that domestic mining generates broader economic value through processing, refining, and stronger links with local industry.