Central Banks Show No Sign of Slowing Their Rush to Gold as Geopolitical Tensions Intensify Amid Trump's Policies
Central banks around the world show no indication of slowing down their push into gold, as the political and economic turmoil resulting from former U.S. President Donald Trump's foreign policies continues to fuel demand for the precious metal.
According to a research report by global investment firm Invesco, central banks are steadily expanding their gold holdings, with nearly 50% of monetary authorities planning to increase their gold allocations over the next three years.
'Amid rising uncertainty and limited currency diversification options, gold has re-emerged as a fundamental pillar for enhancing reserve resilience,' said Rod Ringrow, Head of Official Institutions at Invesco.
'Gold is valued not just for its traditional role as a safe haven, but also for its political neutrality — a critical factor as geopolitical risks rise,' he added.
Trump's presidency triggered widespread volatility in financial markets. His announcement of 'Liberation Day' tariffs on April 2 had a sharp negative impact on investor sentiment. U.S. stock markets recorded their worst week since the COVID-19 crash, while Asian stocks suffered their steepest declines in decades.
Commenting on current market risks, JPMorgan CEO Jamie Dimon stated during the bank's quarterly earnings release last week:
'Significant risks remain — including tariffs and trade uncertainty, worsening geopolitical conditions, high fiscal deficits, and inflated asset prices.'
Invesco's 13th edition of its Global Sovereign Asset Management Study (49 pages) quoted a central banker from Latin America as saying:
'Gold is a diversifier, but it is also a form of protection — a backstop when all else fails.'
The study's findings align with a June survey conducted by the World Gold Council, which polled 72 central banks. It showed a record number of respondents expecting to increase their gold holdings over the next 12 months, with 43% indicating plans to boost reserves — up from 29% the previous year.
Shaokai Fan, Head of Central Banks at the World Gold Council, said:
'Western countries have stopped selling gold, while emerging markets are accelerating purchases, aiming to catch up and build larger reserves.'
Speaking specifically about 2024, Fan described central bank demand for gold as 'insatiable,' noting that purchases had exceeded 1,000 metric tons for the third year in a row.
Central banks have become one of the primary forces driving the ongoing gold bull market, which has seen prices double since late 2022 — a trend that accelerated following Russia's invasion of Ukraine.
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