Gold has rocketed in value of late. While gold had steadily appreciated during the pandemic, in late April 2025 it hit unprecedented heights – topping $3,500 (£2,630) per troy ounce. That’s because of the large central bank purchases, the single biggest reason for the price surge. Moreover, significant demand for geopolitical stability is pushing this trend upwards.
Whatever the immediate motivation, central banks have emerged as the new stars of the gold market. Since 2022, they have each purchased more than 1,000 tonnes of gold annually. This trend is a continuation of their net buying trend that has lasted for over 15 years. Countries where these acquisitions lead the way are China, Russia, Turkey, Poland, India, and Azerbaijan. This surge in purchasing activity signals a major step toward diversification of reserves and risk with alternatives to traditional fiat currency.
In reality, the price of gold has gone through violent swings throughout history. The last gold record, set in January 1980 at $850 (£640). At today’s rates that number is about $3,493. After this increase, the price quickly corrected, falling to $485 (£365). Most recently, gold hit a new high of $3,124 in late March 2025, furthering the commodity’s unpredictable streak.
Only about 216,265 tonnes of gold have ever been mined in the course of human history. Today, production is increasing by more than 3,500 tonnes per year. In the last 11 years from 2010 to 2021, central banks averaged annual net purchases of only 481 tonnes. That’s hardly surprising, considering what a dramatic reversal in demand this number represents.
As we know, geopolitical tensions are at the highest point in decades—particularly following the invasion of Ukraine. In reaction, central banks are reassessing their reserves. Daan Struyven highlighted this trend by stating, “In 2022 the reserves of the Russian Central Bank got frozen in the context of the invasion of Ukraine, and reserve managers of global central banks around the world realized, ‘Maybe my reserves aren’t safe either. What if I buy gold and hold it in my own vaults?’”
The changing nature of global diplomacy has made gold more attractive than ever. Simon French explained that countries not aligned with the US or Western perspectives might find gold a more secure asset: “If they are not aligning themselves with the US or the Western view, on diplomatic grounds, on military grounds… having an asset in their central bank that is not controlled by their military or political foes is quite an attractive feature.”
Read on to see what experts are saying about what’s causing this bullish sentiment around gold. Louise Street remarked on the conditions favoring gold’s rise: “It’s the kind of conditions that we consider a bit of a perfect storm for gold.” Fostering this trend is inflationary pressures and unpredictable US policy.
The market’s response to gold’s soaring prices has produced a fascinating combination of exuberance and fear among investors. A director of a gold dealership in London noted an underlying anxiety: “There’s anxiety about which way the market is going to go next.” This sentiment is echoed by Zoe Lyons, who described the market atmosphere as filled with “excitement and buzz but nervousness and trepidation.”
Some of the future looks gold-tinged, other analysts urge a note of caution. Russ Mould warned that after such a significant run-up in prices, a pause for breath might be expected: “Given that it has had such a stunning run, it would be logical to expect it to have a pause for breath at some stage.” Furthermore, Daan Struyven acknowledged that while demand is likely to remain strong in uncertain geopolitical conditions, temporary dips could occur: “So you could see temporary dips. It may seem odd to be optimistic in this new and very uncertain geopolitical environment. Inadequate supply Central banks are looking for safer reserve holdings, which will keep pushing demand higher in the medium term.
Moreover, investors should not mistake this developing landscape as an opportunity for short-term speculation that can result in unexpected losses. Susannah Streeter cautioned against impulsive decisions: “Short-term speculating can backfire, even though there will be a temptation to hang on to the coat-tails of the record run upwards.”