While prices have consolidated after January’s sharp run‑up and a subsequent sell‑off, we do not believe the rally has run its course
In this Article:
1. Central banks are still buying
2. Geopolitics back to the forefront
3. Fed easing could add a tailwind
4. ETFs showing renewed appetite
5. Digital dollars and reserve evolution
Momentum may moderate from here. But the structural drivers underpinning the market remain firmly in place – and in some cases are strengthening.
’s Structural Support Remains Intact Despite January Sell-Off
Source: Refinitiv, ING Research
1. Central Banks Are Still Buying
Official sector demand remains the backbone of the gold market. Since Russia’s invasion of Ukraine in 2022, central banks, particularly across emerging markets, have accelerated reserve diversification in response to sanctions risk, geopolitical fragmentation and a desire to reduce reliance on the US dollar. Crucially, this demand has proved steady and largely price-insensitive.
Poland, the world’s largest reported gold buyer last year, has signalled further purchases as it targets a higher absolute level of gold holdings rather than a fixed share of reserves. It is now targeting around 700 tonnes of gold, up from roughly 550 tonnes, rather than a fixed 30% share of reserves. This underscores that reserve accumulation remains strategic, not tactical.
China’s central bank also extended its gold buying to a fifteenth month in January.
As long as geopolitical fragmentation persists, a meaningful reversal in central bank gold demand looks unlikely. This structural floor continues to underpin the market at elevated price levels.
Central Bank Demand Remains Resilient
Source: World Gold Council, ING Research
2. Geopolitics Back to the Forefront
Geopolitical risk has re-emerged as a dominant macro driver. From renewed Middle East tensions to trade frictions and tariff threats, investors are navigating a more uncertain global environment. Policy unpredictability, particularly around trade, is increasing volatility across asset classes. Against this backdrop, safe-haven demand remains well supported. Gold’s role as a hedge against geopolitical and policy shocks is once again in focus.
3. Fed Easing Could Add a Tailwind
A shift in the US monetary policy backdrop could provide an additional tailwind for gold. While the remains cautious, the balance of risks is gradually tilting towards easing as growth momentum cools and inflation continues to normalise.
Our US economist expects the Fed to begin cutting rates in the second quarter, with policy becoming incrementally less restrictive over the coming quarters. Even a modest easing cycle would be supportive for gold, lowering real yields and reducing the opportunity cost of holding non‑yielding assets.
4. ETFs Showing Renewed Appetite
ETF positioning remains well below the 2020 peak, leaving room for further inflows. After a period of consolidation, gold ETFs are once again attracting investor interest. While central bank buying continues to anchor the market, ETFs have the capacity to amplify price moves.
If rate‑cut expectations firm or geopolitical risks intensify, a renewed wave of ETF inflows could provide another leg higher for gold prices.
Historically, ETF holdings tend to rise alongside prices and are closely linked to expectations for US monetary policy, reinforcing the case for stronger inflows as the Fed moves towards easier policy.
ETF Flows Respond to Shifts in Fed Policy
Source: US Fed, Refinitiv, ING Research
5. Digital Dollars and Reserve Evolution
Reserve evolution is no longer confined to central banks. The rapid growth of US dollar-backed stablecoins has created a new institutional buyer of reserve assets.
Stablecoin issuers, most notably Tether, have become significant buyers of reserve assets, including US Treasuries and increasingly gold.
Tether alone purchased over 70 tonnes of gold last year, second only to Poland among reported buyers, and now holds around 140 tonnes across its reserves and gold‑backed token. If gold remains part of this reserve strategy, stablecoin growth could represent an additional structural source of demand, behaving more like central bank buying than retail flows.
While still smaller in scale, this channel adds another layer of structural support.
Momentum May Slow, but the Case for Gold Remains
The path higher is unlikely to be linear. At record price levels, physical demand is becoming more price sensitive, and periods of consolidation – or short-term corrections – should be expected.
However, the structural pillars of this rally – central bank diversification, geopolitical fragmentation, potential policy easing and renewed ETF interest – remain intact. For now, the broader environment continues to favour gold.
Disclaimer: This publication has been prepared by ING solely for information purposes irrespective of a particular user’s means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more