Friday, in a detailed analysis released on Wednesday, states that, according to the European Central Bank, it is currently the second-largest reserve on the planet, just behind the US dollar, officially overtaking the euro.
The central bank was loaded into metals until 2024, pushing total reserves to levels not seen since the mid-20th century. And they still hold more than 20% of global demand for gold from around 10% a decade ago.
The report explained that central banks were loaded into money to protect themselves from inflation, currency pressure and political blows. Gold gives something to rely on something that does not depend on a single government. With inflation still unpredictable and tensions growing among global forces, banks are dumping foreign currency, particularly the euro, and relying on gold to ease the economy.
Emerging markets throw away currency and move for money
The ECB said gold is more attractive to countries that deal with the threat of Western sanctions and currency segregation. Developing countries are particularly concerned about being too dependent on the dollar and euro, and are separated from Western currencies to avoid being caught up in the global financial crossfire.
The actual purchases that Russia invaded Ukraine in February 2022 were because it caused a storm of inflation and interest rate hikes, suddenly making Gold look like the only safe bet. I said ECB.
The same fear and instability continues until 2025. In particular, the market is volatile without the US anticipating tariffs and trade rules under President Donald Trump.
China is the biggest buyer throughout this, with India and Turkey nearby. The data show that these three countries have led fees to reduce their exposure to the dollar. They used gold to build a more independent reserve position. result? Global Gold prices were hit after record, including new highs this year.
However, the meeting has not been smooth these days. Over the past few months, prices have become more volatile. Investors and banks are responding to a rapid change in US economic policies, particularly regarding tariffs and trade. Still, the long-term outlook has not changed much.
Banks start to slow down, but don’t stop buying
Still, the pace is cooled. In a report analyzed by ING, the World Gold Council showed that central bank purchases fell 33% in the first quarter of 2025 compared to the previous quarter. China’s appetite was slowest. However, purchases have not stopped.
“Despite the slowdown, the central bank is likely to continue to add gold to its reserves, given its certain solid economic environment and willingness to diversify from the US dollar,” ING strategist Ewa Manthey wrote last month. She added that the bank has added about 30 tons of gold over the past six months alone.
Hamad Hussain, a commodity economist at Capital Economics, told CNBC: “The institutions play an important role in the Gold Rally and will continue to buy gold at a slower pace than in the past few years.” He added that many reserve managers are seen as backups to “financial, inflation and geopolitical risks.”
That sentiment was reflected earlier this month by Mark Haefele, chief investment officer at UBS Global Wealth Management, telling clients to “ensure diversification of their portfolios and maintain adequate exposure to gold and hedge funds.”
The ECB report said future prices will primarily depend on how much money the gold supply can keep up. He noted that historical gold supply is flexible and is in response to increased demand as ground inventory increases. “Therefore, if history is a guide, further increases in the official demand for gold reserves could also support further growth in global gold supply.”
Cryptopolitan Academy: Coming Soon – A new way to earn passive income with Defi in 2025. learn more
