Summary
Escalating global geopolitical risks and strong central bank gold purchases have been key drivers that have helped to push the world gold price to new record highs during 2025, with gold prices have surged above the USD 4,000 threshold. World gold prices have risen by 57% between 1 January 2025 and 11th December 2025. This follows a 25.5% increase in the price of gold in 2024.
Escalating Geopolitical Risks
Increasing geostrategic competition and military rivalries between global powers have created a more complex international geopolitical risk environment worldwide within the past decade. The protracted Russia-Ukraine war and multiple recent conflicts in the Middle East highlight these intensifying geopolitical risks.
Conflicts in the Middle East have continued to support demand for gold as a safe haven asset during 2025. Iran’s gold imports were estimated at 96 tons the year to March 2025 as risks of conflict and sanctions escalated. The UN snapback sanctions on Iran that took effect on 28th September are likely to continue to drive Iranian gold purchases. Meanwhile other conflicts in the Middle East in recent years have also supported gold purchases as a safe haven asset.
Central Bank Gold Purchases
The escalating use of sanctions by many OECD nations against other countries have also helped to support strong net gold purchases by central banks in recent years. Notably, sanctions by many OECD countries against Russia in 2022 following the invasion of Ukraine resulted in the freezing of a significant share of Russia’s official foreign exchange reserves that were held abroad, estimated at around USD 300 billion.
This has raised concerns amongst other developing countries about the potential risks to their foreign exchange reserves held abroad in the event of financial sanctions and asset freezes. This is an important factor that has helped to drive central bank gold purchases since 2022. Some central banks have also been diversifying foreign exchange reserves to reduce exposure to the US dollar, which has depreciated against many major currencies since the beginning of 2025.
China’s central bank, the People’s Bank of China, has been a significant net purchaser of gold since 2022, with estimated cumulative net purchases of around 300 tonnes of gold during 2022-25.
With net purchases of gold by central banks having exceeded 1,000 tonnes per year during 2022-2024, gold has become the world’s second largest reserve asset after the US Dollar, overtaking the Euro. During the first ten months of 2025, central banks continued to be net purchasers of gold, buying a cumulative total of 254 tonnes.
IBuoyant Indian Demand for Gold
India is one of the largest importers of gold in the world, with an estimated 812 tonnes of gold imports in 2024, which was equivalent to around 16% of world gold demand that year. This reflects the importance of gold as a store of value and safe haven asset for Indian households, with notably strong demand linked to the Indian festival of Diwali, when gifts of gold are an important tradition. Total gold holdings by Indian households and temples is estimated to be around USD 3.8 trillion, with the value buoyed significantly due to surging gold prices in 2024 and 2025. This highlights the importance of gold as a safe haven asset in Indian society. India’s rapid pace of economic growth is also helping to support gold demand, with Indian GDP having grown at the fastest pace among the G-20 grouping of the world’s largest economies during 2023 and 2024, with similar rapid growth momentum estimated for 2025.
Outlook for Gold
Escalating geopolitical risks and central bank gold purchases are likely to continue to be important factors that will continue to underpin world gold prices in the medium-term outlook. Fiscal concerns due to high levels of government debt measured as a share of GDP in many of the world’s largest economies, including the US, UK, France and Japan, are also supporting investment demand for gold as a safe haven asset.
Surging world gold prices have significantly increased the profitability of many existing gold mining operations and are attracting investment inflows into new gold mining projects worldwide. This boosting the gold mining industry in many countries worldwide. For example, in Australia, gold exports are expected to rise from AUD 47 billion in 2024-25 to AUD 60 billion in 2025-26, which will make gold the second largest export for Australia.
In an increasingly turbulent world, the role of gold as a safe haven asset is again rising in importance for many investors, including central banks, asset managers as well as households.
