In the October 7 issue of Moneycontrol Pro Panorama, investors and central banks see bullion as protection against the era of mistrust.
On market days, Moneycontrol Pro members get the Panorama email. In addition to providing quick access to Moneycontrol Pro articles, it adds a little something more by outlining a background, event, or trend that investors should be aware of.
Gold has broken beyond the $4,000-an-ounce barrier, which even the most optimistic speculators previously believed was far off.
Why is this gold rush happening? The rise in the yellow metal is indicative of a general sense of unease among sovereign wealth funds, central banks, and even private investors. Government purchases of gold at record highs are an act of insurance rather than optimism.
Gold has risen 14 percent since late August and an incredible 47 percent so far this year, breaking out from the previous range of $3,200 to $3,450 per ounce.
The breakdown of Bretton Woods, the oil shocks of the 1970s, and the 2008 financial crisis were the last times we saw this kind of coordinated accumulation by central banks. Here, my colleague Shishir Asthana goes into more detail on the causes of the recent gold boom.
For months, economists attempted to attribute the spike to safe-haven flows and expectations on rate cuts. However, it is only the surface. There is a more complex and gradual tale behind it: the redefining of what constitutes a “reserve asset.” As paper promises falter under the weight of international debt, sanctions, and policy weariness, gold, the oldest form of money, is subtly regaining that position.
A research paper from Goldman Sachs claims that three conviction buyers—central banks, Western ETFs, and, to a lesser extent, speculative traders—have been driving the breakthrough.
Short-term speculation is not driving the surge, according to the investment bank, but rather ETF inflows and fresh central bank purchases after the summer lull. The fact that speculative positions only make up a small portion of the move indicates that actual money is driving the rally.
The competition for the reserves
The reserves of central banks in Asia, the Middle East, and certain regions of Europe have been growing by tons of gold. Purchases continued despite price increases, suggesting that protection rather than profit is the driving force.
After a brief summer hiatus, central banks resumed their purchases in 2025, confirming the idea that gold has evolved from a speculative to a strategic asset.
Not everyone is hurrying in, though. Between January and August 2025, India’s Reserve Bank added little under four tonnes, a significant decrease from over 45 tonnes over the same time the previous year.
In order to preserve operational flexibility or prevent market agitation, it has also stalled the repatriation of gold kept overseas. Nevertheless, the price increase has driven up the value of India’s reserves, which are now worth over Rs 4.3 lakh crore, a 57 percent increase in only one year. On paper, there is a bonanza, but there is a policy conundrum as well.
For India, what does it mean?
$4,000 in gold is a mixed blessing for India. The import bill rises as the RBI’s reserve value rises. The current account is strained for every $100 increase in gold prices. In order to prevent constraints from undermining domestic confidence, policymakers must balance the need to discourage imports.
Additionally, there is a strategic danger. We run the danger of losing momentum in the silent battle for monetary sovereignty if developing peers like China, Turkey, or the Gulf nations continue to increase their gold holdings while India pulls back. Gold continues to act as a stabilizing force when the world’s credit systems falter, and it is gradually moving away from the dollar.
Stated differently, gold is now a hedge against uncertainty as well as inflation. And you can tell who is losing trust when the purchasers are central banks themselves.