Gold has achieved record-breaking gains in 2025, driven by strong central bank demand, macroeconomic uncertainties, and shifts in asset allocation strategies. According to an economic and financial analysis report by ING Groep NV, this bullish trend is expected to persist into 2026, with the average gold price projected to reach $4,325 per ounce. The bank noted that gold prices have long reflected global economic and political pressures, typically rising during periods of heightened uncertainty. Following the 2008 financial crisis, gold surpassed $1,000 per ounce; during the COVID-19 pandemic, it climbed to $2,000; and after former U.S. President Donald Trump announced new tariffs in April 2025, gold breached the $3,000 mark. More recently, amid a prolonged U.S. government shutdown, gold prices soared past $4,000.
As a standout asset class, gold has significantly outperformed major indices such as the Nikkei 225, FTSE 100, and Nasdaq, as well as bonds and crude oil, in dollar-denominated returns this year. Demand has shown robust growth, with the World Gold Council reporting a record quarterly high of 1,313 tons in Q3 2025. Investment demand emerged as the primary driver, with gold ETF holdings increasing by 222 tons—the largest quarterly inflow in years—bringing global holdings close to the November 2020 peak. Bar and coin demand remained steady at 316 tons. Central bank purchases also shone, rising 28% quarter-on-quarter to 220 tons in Q3, 6% above the five-year quarterly average. The National Bank of Kazakhstan was the largest buyer, while Brazil’s central bank added to its gold reserves for the first time since 2021. In October, global central banks increased net purchases by 36% to 53 tons, marking the strongest monthly growth since November 2024. China and Poland led the charge, with China’s central bank adding gold for the 13th consecutive month (30,000 ounces in November, totaling 74.1 million ounces). Poland topped global purchases with 83 tons in 2025, resuming buying in October after a five-month pause.
The surge in central bank gold buying is structurally driven, ING noted. Following the Russia-Ukraine conflict, U.S. and European sanctions on Russian assets raised concerns about similar actions against foreign-held reserves, prompting a shift in reserve strategies. Annual central bank purchases doubled from around 500 tons pre-conflict to over 1,000 tons, reaching 1,045 tons in 2024. The 2025 central bank survey by the World Gold Council revealed the highest buying intent since the survey began in 2019.
On the supply side, global mine production growth remains sluggish and inelastic. Since 2019, output has stayed flat, with minimal price impact. ING emphasized that gold demand is primarily driven by macro factors like real yields, dollar movements, central bank activity, and investment flows, while mine supply rarely exerts strong downward pressure.
For 2026, ING maintains an optimistic outlook, citing sustained central bank purchases, ongoing U.S. trade tensions, geopolitical risks, expanding ETF holdings, and expectations of Fed rate cuts as key price supports. Further ETF demand recovery is likely as the Fed eases policy, with current holdings still below 2020 peaks. However, potential downside risks include forced liquidations during market sell-offs, reduced safe-haven demand from geopolitical de-escalation, and central bank gold sales. ING stressed that any price dips would likely attract renewed retail and institutional buying, limiting downside potential.
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