Gold prices soar as nations race to hoard reserves

Nations and investors worldwide are fueling a gold rush as prices soar to record highs, reflecting shifts in global financial and geopolitical dynamics.

From the United States to India, the race to hoard gold has intensified amid economic uncertainty, dollar diversification efforts, and geopolitical crises.

The World Gold Council reports gold prices rose from $1,280 per ounce in January 2019 to $2,640 in December 2024—a 100% increase.

In Pakistan, currency devaluation amplified the surge, with gold prices climbing 415% during the same period. Analysts attribute this trend to factors like inflation, currency instability, and geopolitical disruptions, including the Russia-Ukraine war and post-pandemic economic turmoil.

Central banks have played a pivotal role in this gold rush. In 2022, they purchased 1,136 tons of gold, marking the largest annual buying spree since 1950, according to the World Gold Council.

This trend continued in 2023, with central banks adding 1,037 tons to their reserves. Emerging economies like China, Russia, and India have been especially active, seeking to reduce reliance on the U.S. dollar.

China has aggressively increased its gold holdings, recently discovering over 1,000 tons in its Hunan province, valued at more than $82 billion. The People's Bank of China and private investors have also driven demand, sparking speculation about Beijing’s intentions to dominate global gold markets.

India, another key player, expanded its gold reserves by 40% between 2019 and 2024, reaching 854 tons. The Reserve Bank of India noted that Indian households also lead globally in holding gold jewelry, with 136 tons.

Economic experts suggest gold's appeal lies in its dual benefits as a secure investment and a hedge against inflation. Fitch and Moody’s emphasize that gold reserves strengthen a country’s fiscal stability and credit rating.

The gold race underscores broader shifts in the international monetary system. Since World War II, the U.S. dollar has dominated global trade, but geopolitical tensions and financial crises have challenged this dominance. Russia, for instance, turned to gold to weather Western sanctions, further reducing its dollar dependency.

Projections for 2025 suggest gold prices could reach $3,000 per ounce, according to Goldman Sachs and JPMorgan. However, experts caution that central bank policies, U.S. interest rates, and geopolitical developments will dictate future trends.