Central banks increase gold purchases despite the rally. What will happen to prices next?

Central banks around the world have increased their gold purchases despite record high prices. During the third quarter they purchased 28% more precious metal than in the second quarter. The growth of purchases is explained by the desire to protect reserves from the weakening U.S. dollar and geopolitical instability. Some Wall Street analysts predict a decline in the rally in the near future, while some are confident of further growth.

Central banks noticeably increased purchases of gold in the third quarter, despite record high prices, writes Bloomberg. A number of countries returned to the market, considering gold as a reliable instrument of defense against the weakening of the U.S. dollar. Thus, from July to September central banks purchased 220 tons of the precious metal - 28% more than a quarter earlier, according to the report of theWorld Gold Council (WGC).

In just the first nine months of 2025, central banks added 634 tons to their gold reserves - less than in the same period in the three previous years, but significantly higher than before 2022, when Russia's invasion of Ukraine began. The WGC predicts year-end purchases will be between 750 and 900 tons. "Rising geopolitical tensions, continued inflationary pressures and global trade uncertainty are increasing investor interest in protective assets," emphasized WGC senior analyst Louise Street.

At the trading on October 30, spot gold prices jumped by almost 2% to $4014. Despite the recent correction, since the beginning of the year the precious metal has risen in price by about 50%, and in early October reached a record level - above $4380 per troy ounce. Price growth was mainly supported by central bank purchases, as well as the desire of investors to protect their portfolios from risks, emphasized Bloomberg.

Citi on October 27 lowered its gold price forecast for the next three months from $4000 to $3800 per ounce - 5% below the current price, Reuters reports. The bank explained the decision by the change in market conditions after the U.S. trade talks with a number of Asian countries and China's signals of readiness for dialog, which reduced uncertainty in the markets. According to Citi, gold in the short term could also be affected by a slowdown in inflation and the possible end of the U.S. government shutdown. Nevertheless, in the medium and long term, Citi maintains a positive view on gold as an instrument of protection against geopolitical and economic risks.

But other Wall Street analysts expect the gold rally to continue into 2026, with UBS predicting the gold price to rise to $4700 an ounce by the end of the first quarter of next year and Goldman Sachs forecasting $4900 by the end of 2026.

"As bullion and coin trading amid FOMO (fear of missing out on profits) is in full swing - also helped by geopolitical tensions - we maintain our positive outlook for the year," the World Gold Council also noted. - The rapid rise in gold prices has not been a deterrent, as it has been at certain periods in the past."

This article was AI-translated and verified by a human editor