Central banks accelerate purchases, adding demand for gold

Central banks bought gold in the third quarter at the fastest pace since late 2024, according to the World Gold Council. Geopolitical risks and concerns about governments’ fiscal discipline helped drive demand.^[1]

Central banks hold gold as part of their reserve assets. The World Gold Council expects stronger-than-anticipated central-bank purchases and investment demand to provide important support for gold through year-end.^[2]

Additional central-bank purchases absorb more of the gold available in the market. Other things equal, that supports the price and raises miners’ potential sales revenue per ounce; whether profits improve also depends on production costs and output. The World Gold Council’s expectation of support through year-end depends on central-bank and investor demand remaining strong.^[2]

Bonds still compete for investors’ money: gold pays no interest, so higher bond yields increase the income investors forgo by holding it. The World Gold Council identifies high interest rates and elevated bond yields as headwinds.^[2]The US 10-year Treasury yield stood at 4.95% on November 3, up from 4.91% the previous session but below 5.05% on October 28. That leaves gold facing substantial competition from interest income even as official buying strengthens.

Impact

What to watch next

• The November 6 US October payrolls report: stronger-than-expected hiring could lift bond yields and intensify competition for gold from interest income; weaker data could ease that pressure.
• The November 10 US October Consumer Price Index release: whether inflation cools will shape interest-rate expectations and test whether the yield headwind for gold can ease.