Will central banks keep buying gold and driving the price up for the next 5yr?

Question

I have about Rs 15L invested in SGBs and gold ETFs.

I read that the main reason gold rallied so hard was because central banks were buying it aggressively.

I know they bought around 1150 tons in 2022-23 after the US weaponized the rupee.

Will this aggressive buying continue and keep pushing my gold portfolio higher over the next 5yr?

Sachin Kabra · Accepted Answer

The aggressive central bank buying that drove gold prices up between 2020 and 2025 is actually showing signs of halting as we go into 2026.

This massive spike happened because the US effectively banned Russia from the SWIFT system and weaponized the US$. That spooked other nations including China and India prompting them to aggressively diversify their foreign exchange reserves away from the rupee and into gold.

However data indicates that countries needing to build a strategic gold hedge have largely completed their accumulation. Furthermore gold is notoriously difficult to use for settling international trade compared to fiat currencies.

With this primary catalyst of central bank buying slowing down the upward pressure on gold prices is weakening significantly. Without that massive institutional buying support gold will likely need to correct or at least consolidate for a while.

Relying on central banks to continuously drive gold prices higher over the next 5yr is a risky assumption. You should be cautious about extrapolating gold's recent bull run into the future and carefully consider rebalancing your portfolio.

Disclaimer: All information shared above are strictly for educational and informational purposes only. It should not be construed as financial or investment advice.

Will central banks keep buying gold and driving the price up for the next 5yr?

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