Gold rates soaring imminently?
Got a soft spot for gold? Here's some cheerful news that might tickle your fancy.
Gold took a tumble after Donald Trump became the new U.S. President, but it looks like it's bounce-back time. Investors are buzzing about this optimistic news.
Gold shined bright in 2024, despite its price dropping since November. By the year's end, investors were grinning from ear to ear, having raked in a whopping 27% return, the best since 2010.
And guess what? Even in 2025, the experts got their telescopes out and started pointing towards gold. A recent tidbit from the World Gold Council (WGC) has investors doing a little dance.
Gold's Shining Moment
Recent reports from November have kicked the door open on central banks' gold-buying activities. Turns out, these institutions haven't slowed down a bit. In fact, they netted 53 tons of gold during that period, with Poland snagging the most at 21 tons and Singapore giving back the most at 5 tons.
In 2024, this surge in demand was a crucial factor in gold's price hike. The interest was sparked mainly by emerging countries looking to beef up their strategic reserves, free from the U.S.'s grasp.
China, one of the largest net buyers, has even jumped back into the gold game, netting a decent 5 tons. Their last significant transaction was way back in April.
So, What's Next?
Despite these positive tidbits, gold's chart hasn't exactly leapt for joy yet. With a struggle to stay above the 100-day line at $2,627 and a hiccup at the 50-day line at $2,650, it's still trying to break through.
Success in breaking the barrier could see gold hitting the resistance at $2,700. But if it fails, well, it might need to take a breather and retest the support at $2,585.
Check out this chart on TradingView
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Behind the Scenes:The surging demand for gold has, without a doubt, been influenced by central banks' gold purchasing frenzy. For three years straight, these institutions have been gobbling up gold at an unprecedented rate, with 2024 marking the third consecutive year in which purchases surpassed 1,000 tonnes[2]. This high demand pushed gold prices skyward, reaching an impressive milestone of nearly 30% during 2024 and soaring even higher in 2025, peaking at a staggering $3,500 an ounce in April[2].
The primary motivation behind these purchases is mostly political, including a desire to detach from the dollar and protect against potential sanctions[3]. The European Central Bank disclosed that two-thirds of central banks invest in gold for diversification, while one-fifth do so as a safeguard against geopolitical risks[2]. This strategic buying by central banks has been instrumental in maintaining gold's value and propelling prices upward.
However, it's essential to note that the rapid escalation in gold prices could lead to a temporary decrease in central bank purchases. For example, in April 2025, central banks only managed to add a net 12 tons to global gold reserves, which was lower than the 12-month average[4]. Nevertheless, the strategic nature of central bank buying suggests that they are likely to keep stockpiling gold, potentially bolstering prices over the long haul.
Investors might find delight in the ongoing surge in central banks' gold-buying activities, as this trend is expected to boost gold's value further. This optimistic outlook for investing in gold is substantiated by the recent reports from the World Gold Council.
