But economists say that there is another important factor driving the rally: purchases by central banks.
In this explainer, we explore why central banks are increasingly turning to gold assets, how that is driving a long-term structural shift in demand for the metal, and what that means for gold prices going forward.
Why are central banks buying up more gold?
Russia’s invasion of Ukraine in 2022 and the wave of Russian asset freezes by Western countries that followed “marked a turning point” for the way central banks viewed gold, according to a report by Goldman Sachs Research.
Central banks’ purchases of gold have increased fivefold since the invasion began, and demand from governments is expected to remain high for some time to come, giving gold prices an “ongoing boost”, the report said.
“In many cases, these initiatives are for purely economic benefits,” the article said. “However, gold is also being used by US adversaries to evade sanctions or finance activities that counter US national security interests.”
