Amid growing speculation that the most feared outcomes of White House tariff policy may not come to pass, after all, some analysts are suggesting gold may be nearing the end of its epic bull run.
Indeed, a number of observers have gone on the record with projections that the price of gold could decline as much as 30% from current levels.
It very well could be the case that gold’s more recent and acutely dynamic catalysts are in the throes of weakening. But even if that is so – and it’s too soon to know, for sure – it remains difficult to argue against a continued structural bull case for gold…one that’s been exceptionally well-supported in recent years by central bank demand.
And as the freshly published 2025 Invesco Global Sovereign Asset Management Study makes clear, it’s a demand that’s poised to continue as central banks continue to adjust for the unprecedented levels of multidimensional uncertainty that now characterize the economic and geopolitical landscape.
Report: “Temporary Post-Pandemic Disruptions” Now Permanent
Detailing the macro components of the worldwide economic paradigm shift that’s prompting central banks to rethink how they manage their reserves, the report says, in part:
“What many had hoped were temporary post-pandemic disruptions have crystalized into enduring structural features. Geopolitical tensions, persistent inflation pressures, and fragmented global trade patterns are now recognized as permanent elements shaping long-term investment strategy rather than cyclical headwinds.”
And one way in which the overseers of the world’s economies are responding to this array of structural challenges is by making greater use of gold, an asset that’s enjoyed universal regard as an apolitical, counterparty-free medium of exchange and store of value for millennia.
“Gold is a diversifier,” one Latin America central banker crowed to Invesco, “but it’s also a form of protection and a backstop if all else fails.”
Nearly Half of Central Banks Expect Their Own Gold Reserves to Rise Over the Next Three Years
This affection for gold among the world’s most prominent and influential banking institutions is pervasive. According to the survey data, 86% of central banks reported holding gold currently, while 47% said they plan to increase their allocations over the next three years.
Ownership of physical bullion is expected to remain a centerpiece of central bank reserves risk-reduction strategy through the foreseeable future. That said, roughly 20% of institutions surveyed by Invesco also said they plan to utilize multiple financial instruments…including swaps, derivatives and/or gold ETFs…to more tactically manage their exposure to the metal in the coming years.
“We aren’t selling physical gold,” one European central banker explained, “but we use swaps and futures to fine-tune exposure and generate modest returns.”
It’s a more “fleet-of-foot” approach to incorporating a naturally staid asset such as gold in reserves, but one that could gain increasing favor should the operating environment continue to grow in complexity.
Clear Majority of Respondents to World Gold Council Central Bank Survey See Gold Reserves Rising and Dollar Reserves Falling From Here
Publication of this year’s Invesco study comes on the heels of the World Gold Council’s 2025 Central Bank Gold Reserves Survey, the results of which draw similarly robust conclusions about anticipated gold demand and general amenability to the metal as a portfolio aid:
- 95% of central banks see overall gold reserves among the institutions rising over the next 12 months.
- 43% of central banks believe their own gold reserves will rise over the next 12 months…with none expecting a decline in their gold inventories.
- 76% of central banks expect overall gold reserves to rise over the next five years.
- 73% of central banks project a continued decline in dollar reserves over the next five years.
Notable, too, is that the World Gold Council’s survey found a nearly 20% increase in the number of central banks that said they’re actively managing their gold reserves in 2025 versus the number that said they were doing so last year, largely mirroring the growth rate anticipated by respondents to the Invesco survey.
Many of those who make a long-term structural case for gold point to a projected continuation of substantial central bank demand as a cornerstone reason for their optimism. That certainly makes sense, particularly considering the significant price support that central bank purchases at or near annual record levels have lent to the metal since 2022.
Gold’s True Structural Case Is Found Not Merely in Central Bank Demand…but in the Profound Reasons for It
But I happen to think the most deeply rooted structural case for gold is found not merely in central bank demand, per se – as profound a driver as that is – but in the reasons for that demand. The two most prominent reasons for their gold-buying cited by central bank respondents to the Invesco survey are the metal’s potential to serve as a “safe haven during financial instability” as well as “concerns over geopolitical instability.” For their part, respondents to the World Gold Council’s survey said “gold’s performance during times of crisis” and its utility as an “effective portfolio diversifier” are the two biggest factors in their decision to hold the metal in reserves.
Yes, central banks are buying a lot of gold. But the unmistakable, overarching reason they’re doing so is what investors should take most to heart: the institutions’ collective expectation that comprehensive uncertainty of multiple dimensions will continue to characterize the global economic, fiscal and geopolitical landscapes for the foreseeable future.
It is uncertainty that’s poised, in my opinion, to not only push gold further into record territory in the years to come…long after current tariff drama has dissipated…but to also greatly reduce the metal’s downside risk and otherwise keep it well-supported during periods of profit-taking and technical weakness.
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