Central Banks Bet on Gold as Rate-Hike Doubts Grow

Global central banks are buying gold at a blistering pace, a strategic pivot that signals fading confidence in the power of interest rate hikes to control stubborn inflation. This shift toward the traditional safe-haven asset could have significant implications for global markets and investors' portfolios.

A Record-Breaking Buying Spree

According to the latest data from the , central banks collectively bought a net of gold in the third quarter of 2025, marking a new record. The buying was led by emerging market banks, notably the and the .

This rush into gold is driven by a dual thesis. First, persistent inflation remains a key concern. With inflation in major economies like the U.S. hovering in the range, well above the target, there's a growing sense that monetary policy is reaching its limits. Second, geopolitical uncertainty is pushing nations to de-risk their reserves, reducing reliance on the U.S. dollar and other fiat currencies by holding a politically neutral hard asset.

What It Means for Your Wallet

The actions of central banks are a powerful market signal. Their preference for gold over sovereign debt suggests a potential end to the aggressive rate-hiking cycle. It reinforces market expectations that the is unlikely to raise its benchmark rate further from the current . A peak in interest rates is historically bullish for gold, as it reduces the opportunity cost of holding the non-yielding asset.

For investors, this trend suggests that gold's role may be evolving from a simple hedge to a core portfolio holding. As volatility in equities and bonds persists, gold offers a store of value. However, it's crucial to remember that gold prices can be volatile and are not guaranteed to rise.