Gold (XAU/USD) is extending its historic rally in 2025, trading around $3,760 per ounce and up more than 43% year-to-date, setting the stage for its strongest performance since 1979. Futures briefly tested $3,791.26, just shy of a new all-time high, with intraday support holding firm at $3,709.61.
Investor momentum remains strong, with global ETF inflows surpassing $10.5 billion in September alone and over $50 billion so far this year. Structurally, record central bank buying is reinforcing a durable price floor, keeping gold anchored despite periodic corrections.
Central Banks Cement Gold’s Strategic Role
Monetary authorities continue to reshape gold’s market dynamics. China has expanded its reserves for 10 consecutive months, now holding nearly 74 million ounces, while Russia, India, and Turkey remain steady buyers. Central banks now represent a quarter of annual global demand, the highest share in modern history.
This trend marks a structural shift away from reliance on U.S. Treasuries, with nations seeking sanction-resistant stores of value. Analysts note this “de-dollarisation” drive has effectively established $3,600–$3,700 as a structural floor, with central banks consistently stepping in to absorb supply.
Fed Policy Keeps Gold Supported Above $3,700
The Federal Reserve’s 25 bps rate cut in September added fresh fuel to bullion’s rally. According to CME FedWatch, markets price in an 88% chance of another cut in October and 65% odds in December. Despite resilient U.S. economic data—core PCE inflation at 2.9% and GDP growth at 3.8%—investors expect further easing.
While the U.S. Dollar Index (DXY) holds steady at 98.18, real yields continue to decline, with 10-year Treasuries at 4.18% and inflation-adjusted yields at 1.80%. This environment reduces the opportunity cost of holding non-yielding gold, keeping prices elevated.
ETF and Retail Demand Add to the Surge
Beyond institutional flows, retail investors are amplifying demand. Global ETF holdings have climbed to 3,615 tons in 2025, while silver ETFs gained 95 million ounces in H1.
In India, gold imports surged 37% in August to $5.4 billion, with local prices hitting a record ₹110,666 per 10g (approx. $3,800/oz). Scrap supply is drying up as households hold on for higher prices. In the U.S., Costco gold bars continue to sell out within hours, and coin demand remains strong.
Together, these signals point to a broad and resilient bid for gold, driven by central banks, institutions, and retail buyers alike—pushing XAU/USD closer to a decisive breakout above $3,791.
