①As Washington was hit by a flurry of political, economic, and geopolitical news, investors' thoughts of taking profits or catching their breath in the precious metals market vanished instantly; ②This inevitably brings to mind Lenin's widely quoted remark: “There are decades when nothing happens, and there are weeks when decades happen.”
Cailian Press reported on January 14 (edited by Xiaoxiang) that gold and other precious metal prices surged to astonishing levels in 2025, making it hard to imagine similar returns in 2026. However, strong global demand for safe-haven assets and robust purchases by central banks continue to drive this “mad bull” rally…
Market data shows that at the start of the new year, prices for gold and silver have both hit new highs – as of 2026 so far $XAU/USD (XAUUSD.CFD)$ it has surged nearly 7%, breaking above $4,600;
$XAG/USD (XAGUSD.FX)$ It has soared by 25% and has now broken through the 90-point barrier. The rise in platinum prices this year has also reached 15%, nearing its historical peak.
Even more striking is that all of this is built upon last year’s staggering annual gains of 65%, 125%, and 145% for gold, platinum, and silver, respectively.
As Washington was hit by a flurry of political, economic, and geopolitical news, investors' thoughts of taking profits or catching their breath in the precious metals market vanished instantly. This inevitably brings to mind Lenin's widely quoted remark: “There are decades when nothing happens, and there are weeks when decades happen.”
Just last week, U.S. President Trump ordered the purchase of $2 trillion in mortgage-backed securities (MBS); directed American oil giants in Venezuela; attempted to ban stock buybacks and dividends by defense companies; and sought to cap credit card interest rates at 10%.
Meanwhile, the U.S. Department of Justice also threatened to sue Federal Reserve Chairman Powell.
These moves have all acted as catalysts for the rise in gold and silver. Although the narrative around the “devaluation of the dollar trade” may be exaggerated — with the dollar having remained notably stable for several consecutive months — the strong performance of gold and other precious metals suggests that this notion might indeed hold some substance.
Acceleration in Gold Demand
Private investors’ rush toward high-quality assets as a hedge against risk and inflation complements the highly inelastic nature of central banks’ demand for gold. Meanwhile, reserve managers, driven by strategic considerations and diversification needs, continue to purchase gold regardless of price.
Chinese data may corroborate this trend. Last week, the People's Bank of China announced that it had increased its gold reserves for the 14th consecutive month in December of last year. By the end of 2025, China’s gold reserve scale had reached 74.15 million ounces.
Throughout 2025, the People's Bank of China added 860,000 ounces of gold. Although this figure is lower than the addition in 2024 (1.42 million ounces), it should be noted that this occurred against the backdrop of spot gold recording its largest annual increase since 1979 last year. This still caused the value of China’s gold reserves to surge from $191.34 billion in the previous year to approximately $340 billion (calculated at the latest gold price).
Other central banks are also actively buying. Data from the International Monetary Fund (IMF) shows that Brazil, Finland, and Turkey were the largest gold buyers at the end of last year, pushing official sector gold purchases above long-term average levels.
Deutsche Bank analysts pointed out on Monday, “Clearly, the high price of gold has not weakened the willingness of reserve management agencies to increase their gold holdings.”
State Street analysts share the same view. The bank stated that gold purchases by the official sector are forming a “sticky” source of demand, highlighting a “lasting shift” in official reserve management – from US Treasuries to gold.
This essentially raises the floor for gold prices – State Street believes the floor is $4,000 per ounce, which is not particularly far from the historical high of $4,634 per ounce set on Monday. Meanwhile, the price ceiling is also rising, with a breakthrough above the $5,000 mark seemingly inevitable.
According to data from the World Gold Council, gold accounted for 25.9% of global foreign exchange reserves in October last year. In comparison, the euro accounts for about 20% in the IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER) data. Some analysts also believe that last year’s proportion of gold reserves exceeded that of US Treasuries for the first time, setting a new record since 1996.
Of course, gold is not included in the IMF’s official COFER data, which serves as the benchmark for measuring the composition of global foreign exchange reserves. Instead, it exists within broader measures of central bank assets. For this reason, along with other factors such as data reporting transparency, a considerable degree of caution should be exercised when estimating gold’s position in official reserves relative to currencies or other assets like US Treasuries.
But regardless of the accuracy of the aforementioned data, the trend in central bank reserve allocation is undeniable. In an increasingly volatile global environment, central banks are unlikely to reverse this trend in the short term.
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Editor/Jayden
