Central Banks Remain Bullish on Gold in 2025: A Closer Look
By Shayne Heffernan
Published: 09:57 AM +07, Tuesday, March 11, 2025
Central banks are keeping their faith in gold, and the latest insights from the World Gold Council reveal a trend that’s worth examining. In January 2025, these institutions continued their long-standing habit of net gold purchases, extending a streak that began over a decade ago. But while the headlines might dazzle with talk of a gold rush, let’s take a step back and unpack what’s really happening—and what it means for the broader market.
For 14 years straight, central banks have been net buyers of gold, a pattern that started in 2010 and shows no signs of slowing. Last year saw strong buying activity, and January 2025 added another chapter, though the volume of purchases has tapered slightly compared to recent peaks. Emerging market banks, especially in Asia and the Middle East, are at the forefront. The People’s Bank of China has been a consistent buyer, building its reserves to hedge against global risks, while Turkey and India are also active, with India citing gold as a reliable asset in uncertain times, according to the World Gold Council’s report.
What’s driving this trend? Several factors are at play. Rising geopolitical tensions, persistent inflation concerns, and a growing wariness of the US dollar’s dominance have pushed central banks to diversify. With trade disputes and sanctions—like those imposed on Russia since 2022—gold provides a shield against economic instability. The report also highlights a shift away from traditional safe-haven assets like US Treasuries, as fluctuating yields make gold a more appealing choice. Additionally, some regions are exploring de-dollarization, further boosting gold’s appeal as a reserve asset.
However, this bullish sentiment isn’t universal. While emerging markets are leading the charge, certain developed economies have quietly scaled back, selling off portions of their gold to adjust their portfolios. The World Gold Council doesn’t specify which banks, but the trend suggests a divergence in strategy—some may be turning to digital assets or other investments as alternatives. Moreover, gold buying often depends on market conditions, with many banks purchasing during price dips rather than committing to a long-term plan. With gold prices near recent highs, this opportunistic approach could temper larger purchases if the market overheats.
Zooming out, gold demand isn’t solely driven by central banks. Sectors like jewelry, technology, and individual investment also play a role, and the report notes a softening in these areas, which could offset some of the central bank enthusiasm. Meanwhile, Bitcoin, trading at $79,564 as of this morning, is gaining traction as a competing hedge, particularly among younger investors. The narrative of gold as the ultimate safe haven doesn’t always hold—historical trends show mixed outcomes, and with the next Bitcoin halving still 1,113 days away in 2028, alternative assets might steal more spotlight if global risks subside or inflation cools faster than anticipated.
What does this mean for the market? Central banks’ continued gold buying underscores its role as a crisis hedge, particularly for emerging economies. Yet, the picture is nuanced—net selling by some players and softer demand elsewhere suggest gold isn’t a one-way bet. Investors should watch this space carefully, as central bank actions don’t always predict price movements, and other assets like Bitcoin are vying for attention. Gold remains a favored asset for many, but the market’s complexity demands a cautious approach. What are your thoughts on this central bank trend?
