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Central banks are buying gold to diversify their reserves and shield themselves from geopolitical risks, rising economic uncertainty, and volatile US trade policy. The trend reflects a shift away from the US dollar and enables central banks to maintain financial autonomy. China, Russia, India, and BRICS members are reducing their reliance on the US dollar and increasing their gold holdings. Gold serves as a hedge against inflation and offers long-term stability.

Central banks around the world are increasingly turning to gold to diversify their reserves and protect against geopolitical risks, rising economic uncertainty, and volatile US trade policy. This trend, driven by a growing number of central banks, reflects a strategic shift away from the US dollar and a desire for financial autonomy.

The World Gold Council's Central Bank Gold Reserves Survey 2025 [1] found that 43% of central bankers expect their own banks to increase gold reserves, and 95% believe official global gold reserves will continue to grow in the next 12 months. Additionally, 76% project gold will make up a larger share of reserves over the next five years, and 73% expect to reduce their U.S. dollar reserves over the same period. These figures underscore a significant shift in central bank strategy.

China, Russia, India, and members of the BRICS nations are leading the charge in reducing their reliance on the US dollar and increasing their gold holdings. For instance, China has been buying gold consistently for the past eight consecutive months [1]. This trend is not surprising given the volatile nature of the US dollar, exacerbated by trade wars, sanctions, and conflicts in regions like the Middle East.

Gold's role as a hedge against inflation and a safe haven during crises makes it an attractive alternative to fiat currencies. Unlike paper currencies, gold tends to hold or even increase its value over time, protecting a nation’s wealth. This long-term stability is particularly appealing to central banks seeking to insulate their reserves from economic volatility.

The Federal Reserve, however, does not buy gold. Instead, it acts as a custodian, storing gold for the Treasury, foreign governments, and other central banks. The U.S. Treasury does not regularly buy gold on the open market, and the book value of U.S. gold is still set by law at just over $42 per ounce, far below current market prices [1].

Gold price predictions vary, but some analysts believe the move from $3,000 to $4,000 could take just half as long as it took for gold to climb from $2,000 to $3,000 an ounce. Goldman Sachs, JPMorgan, and other Wall Street analysts are forecasting gold prices will reach the $4,000 milestone by the middle of 2026 [1].

The escalating dispute between Barrick Gold and Mali's military-led government highlights the geopolitical risks confronting mining investors in Africa [3]. As Mali's junta moves to assert control over Barrick's Loulo-Gounkoto gold complex, the conflict underscores vulnerabilities in resource equities tied to unstable jurisdictions.

In conclusion, central banks are buying gold to protect against inflation, trade wars, and global conflicts. Their purchases are supporting gold prices and are expected to continue. This trend reflects a broader shift in global financial strategy, with central banks seeking to maintain financial autonomy and hedge against economic uncertainty.

References:

[1] https://www.americanhartfordgold.com/central-banks-power-golds-rise/
[2] https://www.moomoo.com/news/post/75783414/record-tr4cking-news-default
[3] https://www.ainvest.com/news/barrick-gold-mali-dispute-warning-geopolitical-risks-african-mining-2507/