The precious metal surpassed multiple record peaks in 2024 and broke through the $2,900/oz barrier for the first time in February this year, as investors navigated market volatility following U.S. tariffs and heightened geopolitical risks. Prices peaked at $3,500/oz in April against a backdrop of unpredictable U.S. trade policy.

Traditionally, a weaker U.S. dollar and lower U.S. interest rates increase the appeal of non-yielding bullion. Economic and geopolitical uncertainty also tend to be positive drivers for gold, due to its safe-haven status and ability to remain a reliable store of value. It has low correlation with other asset classes, so can act as insurance during falling markets and times of geopolitical stress.

But given gold’s diverse and fluid drivers of demand at the moment, the metal has recently served both as a debasement hedge — or a form of protection against the loss of a currency’s purchasing power due to inflation or currency debasement — and in its more traditional role as a non-yielding competitor to U.S. Treasuries and money market funds.

“We still think risks are skewed toward an earlier overshoot of our forecasts if demand continues to surprise our expectations. For investors, we think gold remains one of the most optimal hedges for the unique combination of stagflation, recession, debasement and U.S. policy risks facing markets in 2025 and 2026,” said Gregory Shearer, head of Base and Precious Metals Strategy at J.P. Morgan.

Who will be the main buyers of gold in 2025?

Following gold’s significant 30% rally, some investors have questioned who the major buyers of gold will be in 2025, with prices at current levels.

Underpinning the J.P. Morgan Research forecast for gold prices is continued strong investor and central bank (CB) gold demand, which is projected to average around 710 tonnes a quarter on net this year. 

Central banks:

Consistently high levels of purchases by CBs (900 tonnes forecasted in 2025) are expected, given the current macro environment as well as a further expansion in investor holdings, particularly from exchange-traded funds (ETFs) and China.

Even with three consecutive years of more than 1,000 tonnes of CB gold purchases, the structural trend of higher CB buying has further to run in 2025 and 2026, according to J.P. Morgan Research.

Diversification away from U.S. dollar (USD) reserve holdings, while still moderate, has been accelerating in recent years, according to the latest Currency Composition of Official Foreign Exchange Reserves (COFER) data from the International Monetary Foundation (IMF). While USD share increased modestly in the fourth quarter of 2024, it still ended the year at around 57.8%, marking a 0.62 percentage point decline.

“Add in economic, trade and U.S. policy uncertainty and shifting, more unpredictable geopolitical alliances and we think further diversification into gold will amount to around 900 tonnes of CB buying in 2025,” Shearer said.

Globally, CB gold holdings amount to nearly 36,200 tonnes and account for almost 20% of official reserves, up from around 15% at the end of 2023, according to reported IMF data through the end of 2024.

The U.S., Germany, France and Italy still hold around 16,400 tonnes of gold combined. This represents nearly half of reported global official gold reserves, with the U.S. holding almost a quarter of global reported gold reserves alone. Each of these four countries hold more than 70% of its total reserves in gold. Taking out these four outsized holders, gold’s share in official reserves falls to just above 11%.