Central Banks Bought Less Gold in 2025 But It Still Hit a 45 Year High

A 44 Per Cent Surge That Rewrote the Record Books

Here is a number that should stop any trader cold: 56. That is how many fresh record highs gold printed during 2025, a year when the metal climbed 44 per cent and touched $4,550 per ounce in December, according to a recent report from Metals Focus. The last time bullion ran this hot? You have to go back to 1980.

What lit the fuse was a familiar cocktail of fear. Geopolitical tension, anxiety over global growth, sticky inflation worries, and fragile supply chains pushed investors toward the oldest safe haven on the planet. Many treated gold as armor against equity market swings, lifting their allocations as confidence in riskier assets wobbled.

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The de-dollarization story added rocket fuel. Central banks kept rotating reserves away from the greenback, and while their gold purchases came in roughly one fifth below the prior three year stretch, the buying still sat, in the report's words, "significantly higher than historical norms."

Central bank demand may have cooled, yet it stayed well above the long run average, keeping a firm floor under prices.

Who led the charge? Poland stood out, hoovering up 102 tonnes, with China and Brazil also expanding their reserves aggressively.

Mines Dug Deeper While Scrap Stayed Stubborn

Supply responded to the price boom. Global mine output rose 2 per cent year on year to an all time high of 3,817 tonnes, powered by new projects and expansions across Africa, Canada and South America. North America and Asia moved the other way, dragged down by low grade ores and operational disruptions.

Recycling barely budged. Scrap flows ticked up just 2.8 per cent to 1,404 tonnes, a sign that households were hoarding rather than selling into strength. That figure still marked the heaviest recycling since 2012, but the restraint spoke volumes about how nervous consumers felt.

Jewellery Buyers Blinked, Investors Doubled Down

Soaring prices did real damage to adornment demand. Shoppers traded down to lower carat pieces, and some abandoned gold entirely in favor of metals like platinum. The pivot toward pure investment products deepened the slide, with Chinese jewellery demand collapsing 28 per cent as buyers chased ETFs and bars instead.

Physical investment told the opposite story. It leapt 16 per cent to 1,400 tonnes, the strongest reading in 12 years, fueled by bullish sentiment. The gains were not evenly spread. East and South Asia carried the load, and Indian retail investment alone jumped 17 per cent, a move analysts tied to weak regional equity markets. Industrial demand, meanwhile, flatlined as AI driven gains offset softness in consumer electronics squeezed by high prices.

Reading Between the Lines

The real story is not just the rally; it is the rotation underneath it. When central banks ease off yet prices still print 56 records, that tells you private investors and retail buyers are now the dominant force. That shift changes the risk profile for anyone trading the metal.

Watch the cross asset connections closely. A strong gold bid often coincides with a softer US dollar (DXY) and pressure on real bond yields, since lower yields cut the opportunity cost of holding a non yielding asset. Silver tends to amplify gold's moves, while currency pairs tied to producers, such as the Australian dollar, can catch a tailwind. Equity volatility and gold frequently rise together, so a spike in market stress is a signal worth respecting.

The catalysts ahead are sharp. Gold extended its run into 2026, hitting a fresh peak of $5,595 in late January, before the nomination of Kevin Warsh as Fed chair in March knocked it lower; his hawkish stance eased fears over Fed independence. Professional appetite also cooled during the Iran conflict, with some desks disappointed by how the metal behaved in a genuine crisis. Metals Focus still expects a stronger second half, betting on a US and Iran ceasefire. For traders, the levels to monitor are the policy signal from the Fed and any de-escalation headlines from the Middle East, either of which could swing momentum fast.