Central Banks Bought Gold Throughout the Year, Prices Soared Strongly
Gold purchases by global central banks throughout the year were a major factor driving the sharp rise in gold prices to record highs. Amidst global economic uncertainty, interest rate policies, and geopolitical risks, gold has once again become a strategic long-term asset.
Throughout the first quarter, central banks recorded significant gold purchases. Global net purchases reached 244 tons, indicating continued strong interest despite high prices. This trend continued in subsequent quarters, with purchases remaining relatively stable and consistent.
Entering the third quarter, central bank gold purchases again increased significantly. Total net purchases reached 220 tons (a 28% increase compared to the previous quarter). By the end of the third quarter, total central bank gold purchases for the year had surpassed 600 tons, indicating that institutional interest has not abated.
As the year drew to a close, purchases continued. In October, global central banks added another 53 tons to their gold reserves (a 36% month-on-month increase). This confirms that the gold accumulation trend has not stopped, even though prices are near or even at historic highs.
Central bank gold purchases have a significant impact on prices because they create strong and stable underlying demand. Unlike short-term investors, gold purchased by central banks is generally held as long-term foreign exchange reserves, rarely returning to the market in the near term. This tightens physical supply and supports prices.
Furthermore, massive central bank purchases strengthen gold's role as a hedge and a means of diversifying from the dominance of the US dollar. Many countries choose to increase their gold reserves to reduce dependence on certain currencies, especially amid rising geopolitical tensions and global monetary policy uncertainty.
The combination of central bank purchases, inflows into gold ETFs, and expectations of global interest rate cuts have contributed to gold prices posting very strong annual performance. Throughout this year, gold prices have surged sharply and are heading for their largest annual increase in decades. As long as the central bank buying trend continues, gold is considered to have a solid foundation to remain at high levels, and even has the potential to continue its rally.
Source: Newsmaker.id
