Central banks from around the world have been scooping up gold in recent years, lifting the precious metal to record levels. Now, with persistent geopolitical tensions, along with inflation and trade concerns, bullion could soon reach $3,000 for the first time. Gold futures are up more than 9% so far in 2025, outpacing the S & P 500’s 1% advance. As of 1:17 a.m. ET on Thursday, gold traded around $2,900 per ounce. Earlier this month, it hit a record above $2,900. Central banks have been net buyers of gold for 15 straight years. But, it was after the start of the Russia-Ukraine war that they started ramping up their purchases, adding a record high of 1,082 metric tons in 2022, according to the World Gold Council. In 2024, they added more than 1,000 metric tons of bullion for a third straight year, roughly double the rate from before the conflict. Gold is widely seen as a safe-haven asset for uncertain times. In recent years, there has been no shortage of developments — including the outbreak of two wars in Ukraine and in Gaza and a regional banking crisis in the U.S. The fears underpinning gold’s advance aren’t expected to go away anytime soon either. Concerns around sticky inflation and rising global tensions remain, and, what’s more, other growing threats such as the ballooning U.S. deficit, and the protectionist rhetoric around tariffs, have central banks around the world looking for alternatives. “They’re looking at, what else can I have? How else can I deal with my own conditions, as well as the conditions of what’s going on a global basis?” said Joe Cavatoni, senior market strategist of the Americas at World Gold Council. Geopolitical risk There are a myriad of reasons for gold’s move to all-time highs. But one main driver for the recent demand — central bank buying — shows no signs of slowing. Concerns around U.S. policies, such as the threat of tariffs from President Donald Trump and a ballooning federal deficit, have central banks seeking out alternatives to the U.S. dollar or Treasurys. Gold, which is universally recognized and not tied to credit or another counterparty, is a crucial reserve. Last summer, a survey from the World Gold Council showed that 29% of central banks expect to raise their holdings over the next 12 months. Respondents cited gold’s role as a safe haven asset during times of crisis, and as an inflation hedge, as the two top reasons. A look at the biggest buyers last year — including Poland, Turkey, China, India — show that the biggest buyers of gold have raised their reserves in the wake of geopolitical tensions, such as after the onset of the Russia-Ukraine war. In January, the People’s Bank of China (PBoC) added to its gold holdings for a third straight month with tariff fears a main driver behind the move, according to the World Gold Council. ‘The highs are yet to come’ Many investors remain confident that the long-term setup is favorable for gold. UBS this week hiked its gold forecast to an average of $2,900 in 2025, potentially peaking at $3,200, and ending the year above $3,000. “It is always tricky to chase the market higher and uncomfortable when everyone seems to be on the same side of the trade,” Joni Teves, strategist at UBS, wrote this month in a note titled “The highs are yet to come.” “But it also does not make sense to call for the end of gold’s bull run simply because it has reached yet another record.” Chris Mancini, associate portfolio manager of the Gabelli Gold Fund (GOLDX) , is confident in the underpinning reasons for gold’s advance. However, he’s waiting for a spike in inflows in gold-backed ETFs to confirm the next leg higher, as that would indicate the U.S. trader — who has thus far sat out the gold rally — is ready to join the trade. If that happens, he thinks gold could easily rise to $3,200 or $3,300 this year. “The real swing factor is whether or not Americans start to buy,” said Mancini. Indeed, JPMorgan pointed out that gold ETFs saw record inflows last week . Even those who are more circumspect on gold’s prospects after its runup do not expect the price to go down anytime soon. “We view gold as overvalued on a number of fundamental factors but see no reason for a major pullback,” James Steel, chief precious metals analyst at HSBC, wrote on Monday. “The twin pillars of the rally – geopolitics and tariff concerns – cannot be quantified in the way that USD or yield or even equity movements can for gold.” “We look for the market to stay elevated and for central banks and others to buy should there be a correction,” HSBC’s Steel added. Ways to buy gold Investors seeking to elevate their exposure to gold can do so with the actual physical commodity, though they will have to pay for storage and insurance, and understand that the asset is taxed at a collectibles rate. Gold-backed ETFs are also available, though unlike physical gold, fees related to marketing and management are constant expenses. ETFs such as SPDR Gold Trust (GLD) and the iShares Gold Trust (IAU) are up more than 11% in 2025, each. GLD has an expense ratio of 0.4%, while IAU charges 0.25% in fees. Another way to tap into rising prices is through gold miner funds, though investors should note that they are not the same as investing in the physical commodity. Gold mining companies can benefit from the rising price of gold, but have other operational costs and risks tied to running a gold mine. However, gold mining companies that offer a dividend can give traders additional income on top of the rise in the stock price. Gold miner funds such as the Gabelli Gold Fund are available. The $378 million fund, which has a 1.550% adjusted expense ratio, is up 18% year to date. The VanEck Gold Miners ETF (GDX) is also up about 18% in 2025 and charges 0.51% in fees.
