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- Eternal value: the world's central banks are hastily buying gold before imposing duties
Eternal value: the world's central banks are hastily buying gold before imposing duties
In recent days, the price of gold has broken through another psychologically important mark — $ 3,200 per ounce. The rapid growth of the precious metal's quotations occurred against the background of the introduction of Trump's tariffs, which plunged global financial markets into panic. To a large extent, this jump is a product of speculation, but there are quite fundamental factors behind the longer—term growth of gold. Moreover, in the new conditions, against the background of declining investor confidence in the dollar, the potential of the metal is only increasing. Izvestia investigated whether the rapid growth of the asset's popularity would lead to a new iteration of the international gold standard.
A record, another record
The tariffs imposed by Donald Trump have brought down most of the world's financial markets. The exception was gold, where since the beginning of the year, growth has shown $ 600 per ounce, or over 20%. After the "liberation day" on April 2, the metal dropped slightly to $3,000 — investors were taking profits — and then soared again by more than $200, setting another historical high. Obviously, in a situation of uncertainty in the foreign exchange market, gold feels great. Speculators are clearly betting on its growth.
US President Donald Trump
A longer period, however, shows that the spike in prices and the volume of purchases of gold has nothing to do with speculation, although the latter may temporarily overestimate or underestimate its value. Over the past five years, the price of the precious metal has doubled, and over the past 20 years it has increased 6.5 times. Of course, these figures cannot be compared with the rise of some stocks (for example, in the field of high technology), but gold is primarily not about making quick money, but about saving your money. Each time, the jumps in its value occurred against the background of some major events that were crucial for the global economy: the global financial crisis of 2008, the pandemic and subsequent geopolitical upheavals, and, finally, the current war of duties.
The main driver of gold's growth in this long-term dimension is central banks. If they were selling gold in the 1990s and 2000s, then they switched to pure purchases. Central banks around the world have been buying more gold than they sell for the past 15 years in a row. At the same time, in the last three years, the demand of national regulators for gold has exceeded 1 thousand tons annually. Interestingly, the leaders in 2024 were not Russia, China, or even Turkey (traditional buyers of gold), but Poland, whose Central Bank acquired 90 tons of precious metals. For comparison, the People's Bank of China purchased 44 tons, while the reserves of the Bank of Russia did not change last year.
At the beginning of 2025, the trend continued. In February, central banks again bought more than they sold: in principle, this pattern has been stable since the beginning of 2022, with the exception of just three months in the spring of 2023 and December 2024. Poland again topped the list, buying 29 tons of gold at once (which is a lot for Poland, given that its total reserves are about 480 tons), followed by China and Turkey by a wide margin. Other buyers include a very diverse group, including Jordan, Qatar and the Czech Republic.
Note that all this happened even before the introduction of duties (some actions were taken against China, Canada and Mexico, but that's all). It was logical to expect that after the announcement of the Trump administration, these purchases would only increase. Bank of America analysts believe that central banks in developing countries should increase the share of gold in their reserves from the current 10 to 30% (unless Russia fulfills these conditions, and even then if we count actual reserves without taking into account frozen ones in the West), and Goldman Sachs investment bank predicts that gold prices will rise to $ 3,700 by the end of this year and up to $4,000 by the middle of 2026.
Reliability, liquidity and profitability
Will central banks aggressively buy gold amid the turmoil of globalization and rising tariffs? Anton Tabakh, chief economist at the Expert RA rating agency, believes that the build-up of gold reserves still raises questions in terms of expediency.
— There are three main requirements for reserves: reliability, liquidity and profitability. Gold is liquid, but reliability (price stability) is much worse. And profitability depends on the chosen time period — gold regularly fell all the zero years and began to rise in price during the pandemic and after, when the world was flooded with cheap money. Despite centuries of being a "universal equivalent," gold is now just an exchange—traded commodity, albeit well-stored. Russia increased its gold reserves rather out of necessity — it turned out to be profitable and profitable in the short term, but the prospects are not obvious for longer periods, the expert believes.
But in fact, the "gold rush" has now engulfed everyone, and an increase in purchases is almost inevitable. According to Finam analyst Nikolay Dudchenko, according to the latest review by the World Gold Council, more than 80% of WGC respondents from among regulators expect an increase in reserves in gold over a 12-month time period.
— The majority of respondents believe that the main reasons for the increase in reserves are the lack of default risk in the asset, the role of a protective asset during the crisis, the historical position of the central bank, as well as high liquidity and the role of gold as an asset hedging against inflation. Now, the demand for American government securities as a protective asset is falling, and gold may well take its place," the source comments.
Andrey Smirnov, an expert on the stock market at BCS World of Investments, is confident that we should expect increased demand for precious metals to continue in the near future. These purchases will occur due to the acute geopolitical situation, declining demand for the dollar, as well as the desire to protect themselves from inflation, which still has not gone anywhere.
— However, the pace of gold purchases in 2024 was record-breaking. Some of the needs have already been met, and the metal is at a historic high," he said.
Paleoconservatives and dinosaurs
The explosive growth of gold has led to increased talk that the period of the dollar's hegemony as the main reserve currency is coming to an end and the possibility of a return to the Bretton Woods system that existed in world finance until 1971 (when US President Richard Nixon decoupled the dollar from gold) is not excluded. Nevertheless, experts still consider this development to be unrealistic: the current system is too convenient for crisis management.
— This is unlikely, the existing system with the ability to "flood" any crisis with money has too many beneficiaries, — says Anton Tabakh. — The debt burden of the largest economies is rather an argument against the gold standard in some form, because it will not allow to get rid of debt through inflation. Such ideas are now being promoted by paleoconservatives and dinosaurs, so they are unlikely to be implemented. As for reliability and popularity, for gold and 50 years (the life span of the existing post-Bretton Woods financial system) is a short time, we need to think for centuries.
According to Dudchenko, floating exchange rates allow the system to better adapt to external shocks without spending gold reserves. It is more difficult to "attack" such a course with the help of speculative operations.
— In the current conditions, floating exchange rates can reduce dependence on the US dollar. Recall that the United States currently has the largest gold reserve. Finally, there is the so-called monetary policy trilemma, according to which it is impossible to achieve a fixed exchange rate, free movement of capital and independent monetary policy at the same time, for example, it is impossible to be in the gold standard system and at the same time carry out a countercyclical PREP in the presence of free movement of capital. That is, it is simply unprofitable to have a fixed exchange rate in the country," he concluded.
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