Gold is resuming its upward trend following a technical correction, buoyed by central bank purchases and the de-dollarisation of reserves. China and Poland are leading this trend, whilst geopolitical and inflationary uncertainty reinforces gold’s role as a safe-haven asset.
Analysis by José Manuel Marín Cebrián
Following this year’s correction – which was driven by the unwinding of speculative positions in the derivatives market rather than a shift in fundamentals – gold is once again recording gains, fuelled by the quiet de-dollarisation of central banks’ reserves. China and Poland are leading the way, with their gold reserves reaching their highest levels in decades.
The falls of recent months did not mark the end of the gold cycle. In times of stress, investors sell the assets with the highest capital gains to generate liquidity, and gold, following a strong previous rally, became one of the main sources of cash. This pattern was already seen in 2008 and during the Covid crisis, and has been repeated in the first half of this year following the same logic. Added to this was the shift in capital flows towards energy. Tensions in the Strait of Hormuz have driven up the price of oil and reignited inflationary risks, drawing capital towards oil-linked assets at the expense of gold. The correction has cleared the market of excesses, but the reasons why major funds and central banks continue to buy – far from disappearing – have intensified.
Gold pays no dividend and generates no cash flow, but it provides protection when the system fails. Many central banks have been diversifying their reserves for years and quietly accumulating gold, an asset with no counterparty risk that becomes more attractive just as confidence in sovereign debt begins to crack. Whilst the West debates artificial intelligence and stock market multiples, institutional money is taking positions in the metal. Gold does not rise because of fads; it rises because it covers what the system fails to guarantee when it accumulates structural risks. And those risks are still there.
