Central Bank Gold Buying Is Driving Global Price Spike

Global central bank gold buying has reached a fever pitch. In the latest report, central bank gold buying has intensified amid geopolitical tensions, trade frictions, and uncertainty surrounding the evolving US tariff regime. This is pushing governments to diversify their reserves and hedge against currency risk. Consequently, this structural shift has triggered a sustained gold price spike as sovereign institutions prioritize stability over traditional currency.

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Why Gold Price Volatility Persists Even as Central Banks Build Record Reserves

Central banks are emerging among aggressive gold buyers as they seek to strengthen financial stability and de-dollarization. According to India’s Finance Minister, the relentless gold price spike is a direct result of global central bank gold reserves being aggressively expanded.

Nirmala Sitharaman, in a statement, remarked:

“Most countries today, particularly their central banks, are buying gold and silver and storing them…Now the spike is largely due to central banks also buying and storing.”

In the chart below, gold’s presence in global reserves is at its highest level in two decades, directly filling the void left by the retreating dollar.

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Usually, heavy institutional buying stabilizes an asset. However, we are seeing the opposite: record-high central bank gold reserves paired with intense global gold volatility. The paradox presented here puts the traders and institutions side-by-side. As central banks prevent prices from crashing, traders, on the other hand, are reacting to the US tariffs and other geopolitical tensions.

The Sovereign Playbook

Despite the paradox presented, gold’sprice spike may remain upward even as the global gold volatility persists. As central banks continue their de-dollarization efforts, gold is being re-monetized at the sovereign level. While price spikes may feel erratic, the underlying trend is supported by the world’s most powerful financial institutions.

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If central banks are treating gold as the only reliable outside asset, retail and institutional investors may soon have no choice but to follow suit.