Official reserve shifts and ETF inflows lift demand for gold vs dollar. Watch central bank flows, ETF volumes, the dollar and US real yields.
Gold rose 37% YTD in 2025 as central banks and investors stepped in.
Official buyers purchased 244 tonnes in Q1, while physically backed ETFs took in US$5.5bn in August. A weaker dollar and falling US real yields make gold more attractive to reserve managers and private investors around the world, fueling its current growth.
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Institutional Demand: Central Banks & ETFs
Official demand for gold looks structural. Central banks bought 244 tonnes in Q1 2025, about 25% above the five-year quarterly average, with notable purchases from China and the National Bank of Poland.
Physically backed ETFs also moved materially; global gold ETFs attracted US$5.5bn in August, roughly 53 tonnes equivalent, with North America supplying most flows.
Those combined official and investor purchases have persisted over several months, tightening available above-ground supply significantly.
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De-Dollarization Mechanics: China, Russia, BRICS And Reserve Strategy
Reserve diversification is active. The People’s Bank of China added gold for its ninth straight month in July and for a tenth month in August, signaling steady accumulation.
Russia and other BRICS members have increased gold use for alternative settlement methods and continue talks on a regional precious metals exchange to expand non-dollar clearing.
Those policies shift some official reserves away from dollar assets and they raise the incentive to hold bullion globally.
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Market Signals: Dollar, Real Rates, Supply Dynamics
Market signals offer clear catalysts. The dollar has fallen about 10% this year, and gold has risen roughly 37% in 2025 as markets price Fed easing. Lower US real yields lower the opportunity cost of non-yielding bullion.
Q1 mine output stood at 855.7 tonnes, with recycling steady, tightening available supply. That combination magnifies price moves when official and investor demand grows.
There are, however, risks such as sudden policy surprises, hot inflation prints, and disclosure lags that can amplify volatility in short order.
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Conclusion
Structural reserve shifts and sustained official buying create a fertile backdrop for further gold gains, but short-term shocks can interrupt. If you are planning to invest in gold, watch central-bank flows, DXY moves, and US real yields closely.
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