- Central bank demand helped push gold to a record $2,865 per ounce, up 30% from the past year.
- Central banks buy gold for long-term stability, viewing it as protection against uncertainty and geopolitical risk.
- With rising gold prices, many individuals are considering Gold IRAs to safeguard retirement funds from market volatility.
Central Banks & Gold
Gold recently reached an all-time high of $2,865 per ounce, marking a 30% increase over the past 12 months. The price surge is largely due to the role of central banks. They are turning to gold as a vital safeguard against financial instability. It remains a proven stable asset, independent of government-backed currencies.1
Central Banks Drive Record Demand
Central banks showed their influence in 2024. In 2024, central banks purchased over 1,000 tons of gold for the third year in a row. Altogether, this amounted to more than $96 billion. They made up about 20% of global gold demand. The largest buyers included Poland, India, Turkey, and China.2
In the fourth quarter, central banks ramped up gold buying. Purchases rose by 53.5% from the same period in 2023. “Central banks continued to vacuum up gold at an eye-watering pace, their buying exceeded 1000t for the third year in a row, accelerating sharply in the fourth quarter to 332.9t,” the World Gold Council (WGC) reported.3
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This ongoing buying trend shows that central banks invest strategically. They prioritize long-term stability instead of responding to short-term price swings. Central banks rarely sell gold, showing their strong commitment to it as a reserve asset.
Rising Demand and Market Impact
In 2024, total global gold demand hit a record 4,974 tons, says the WGC. This surge pushed gold prices to new all-time highs. The London Bullion Market Association announced that the average gold price reached a record $2,663 per ounce in the fourth quarter of 2024.5
This surge in demand and pricing contributed to gold’s highest ever annual market value. It reached $382 billion in 2024. Investment demand for gold soared. It hit a four-year high with a 25% increase from 2023.6
“When we look at central bank demand, their rationalization for owning gold remains very strong,” said a WGC strategist. “The growing government debt burdens and the dramatically changing geopolitical landscape suggest that central banks will continue to buy gold.”7
Geopolitical and Economic Uncertainty
The WGC anticipates that central banks will once again surpass 1,000 tons in net gold purchases in 2025. Ongoing geopolitical tensions and shifting economic strategies are expected to sustain this trend. “Geopolitical and economic uncertainty remains high in 2025 and it seems as likely as ever that central banks will once again turn to gold as a stable strategic asset,” the WGC stated in its Gold Demand Trends report.8
One key factor driving this shift is the move away from the U.S. dollar. The share of gold in foreign exchange reserves has increased to 34%. This rise shows fears about Western sanctions, especially for Russia. Central banks are pursuing de-dollarization to protect reserves from risk.
“In the background, there is always the BRICS project to initiate a new currency pegged to gold to be used in trade instead of the US dollar,” financial analyst Maurizio Mazziero noted. “The fact that Trump has announced 100% tariffs for those who will adopt it highlights its real feasibility and the accompanying fears.”9
A WGC survey revealed that 69% of central banks expect to increase gold purchases in the next few years. Also, 90% of central banks in emerging markets see gold as a protection against inflation and a safe haven.
Other Factors Driving Gold Demand
Investors are turning to gold more than ever. The shift is due to volatility in equity markets, rising ton, and slowing economic growth. Lower interest rates and a weaker U.S. dollar have also bolstered demand. Despite historically high prices, the appetite for gold remains strong.
In 2024, global demand for gold bars and coins reached 1,186 tons. This is virtually unchanged from the previous year. The WGC predicts similar demand in 2025. Meanwhile, the technology sector has also contributed to gold demand. They consumed 326 tons in 2024. The 7% increase from 2023 mainly comes from the growth of artificial intelligence.10
What’s Next for Gold in 2025?
Gold is at record highs. Safe-haven demand is behind this rise. Inflation fears and new tariff announcements are fueling the ‘flight to safety’. “Individuals are looking confidently at gold, as it has been the best asset class in 2024 with a performance of 27%, rising to 36% for euro-based investors. At the same time, money managers view gold allocation as insurance given geopolitical and trade tariff risks, with stock prices still at highs,” Mazziero explained.11
Looking ahead, analysts predict even higher gold prices in 2025. Swiss bank UBP forecasts gold reaching $3,000 per ounce. Meanwhile, JP Morgan expects prices to exceed that level. Some analysts believe the rally could extend as high as $3,200 an ounce.
Conclusion
If you want to protect the value of your retirement funds, now may be a good time to look at a Gold IRA. Offering safe haven benefits and tax advantages, a Gold IRA can safeguard and potentially grow your nest egg. To learn more, contact American Hartford Gold today at 800-462-0071.
