Central banks worldwide are on track to purchase about 1,000 tonnes of gold in 2025. This marks the fourth consecutive year of heavy buying as they diversify their reserves away from dollar-denominated assets into gold bullion. This trend was reported by consultancy Metals Focus in its annual report on Thursday.
Gold Prices Hit Record Highs Driven by Geopolitical and Economic Factors
Gold prices surged to a record high of $3,500 per troy ounce in April 2025. So far this year, prices have risen by 29%. The increase is linked to ongoing geopolitical tensions and economic uncertainty, including U.S. President Donald Trump’s continued use of tariffs.
High Prices Have Not Reduced Central Bank Gold Purchases
Despite rising gold prices, central bank purchases remain strong. Metals Focus noted that gold buying in the first quarter of 2025 aligns with the average quarterly purchases from 2022 to 2024.
Factors Driving De-Dollarization and Gold Demand
Metals Focus explained that several factors continue to erode confidence in the U.S. dollar and Treasury securities as safe-haven assets:
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President Trump’s unpredictable policies
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Public criticism of Federal Reserve Chairman Jerome Powell
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Deteriorating U.S. fiscal outlook
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Increased geopolitical tensions since Trump took office
These issues have pushed central banks to seek safety in gold instead.
Central Banks Are the Third-Largest Consumer of Gold
Central bank gold purchases represent nearly 25% of total gold demand worldwide. This makes central banks the third-largest consumers after the jewellery sector and physical investment demand.
Although purchases remain high, Metals Focus forecasts an 8% decline in central bank gold buying in 2025 compared to the record 1,086 tonnes bought in 2024.
Leading Buyers: Poland, Azerbaijan, China, and Iran
In the first quarter of 2025, Poland, Azerbaijan, and China led official central bank gold purchases. Additionally, steady inflows from Iran suggest continued buying by the Iranian central bank.
Jewellery Demand Declines Due to Rising Gold Prices
High gold prices have negatively affected jewellery demand. Jewellery production dropped by 9% to 2,011 tonnes in 2024, with a forecasted further 16% decline in 2025. The biggest reductions come from India and China, two major markets.
Price Outlook: Further Gains Expected
Metals Focus expects gold prices to rise by 35% in 2025, reaching $3,210 per ounce. This follows a 23% price increase in 2024. The consultancy also projects that gold prices could continue strengthening into 2026.
