De-Dollarization Fuels Gold’s Historic 60% Rally

By Doug Young – 31 December 2025

Introduction

Gold prices shattered over 50 all-time highs in 2025, posting approximately 60% returns that outperformed equities, bonds, commodities, and cash.

This surge arose from a combination of geopolitical tensions, a weakening US dollar, and steady demand from central banks and investors, according to World Gold Council analysis.

The rally underscores growing scrutiny of fiat currency stability amid gradual de-dollarization processes.

2025 Performance Overview

Gold comfortably surpassed $4,000 per ounce by year-end, with a 16% increase in the third quarter alone driven by record investor demand.

World Gold Council attribution models identify multiple contributors to these returns, including economic growth, risk premiums, uncertainty, opportunity costs, and momentum, rather than reliance on any single factor.

Central bank purchases reached 634 tonnes in the first three quarters—a 28% quarter-on-quarter rise—while exchange-traded fund (ETF) inflows approached record annualized levels near $108 billion.

Central Bank Demand Surge

Emerging market central banks spearheaded diversification, acquiring 220 tonnes in the third quarter of 2025—10% above the previous year’s pace—as reserves moved away from dollar-denominated assets amid sanctions risks and geopolitical divides.

Full-year estimates project 750 to 900 tonnes, with banks like Poland’s National Bank maintaining robust accumulation strategies.

Such buying continues at higher prices, as fewer tonnes suffice to elevate gold’s share in reserves.

De-Dollarization Context

De-dollarization unfolds through incremental reserve adjustments rather than abrupt collapse; nations increasingly favor assets beyond US legal reach following instances of payment system restrictions.

BRICS countries and others added 166 tonnes in the second quarter, emphasizing gold to enhance monetary independence amid emerging settlement alternatives.

JP Morgan research frames this as measured diversification within broader dollar portfolios, supported by international investor reallocations.

Investor Shifts and Flows

Investment demand peaked in the third quarter, with ETFs recording 134% year-over-year growth to 537 tonnes, as portfolios sought alternatives to less reliable assets like bonds.

Demand from Asian and official sectors offset traditional downward pressures such as rising yields, indicating a potential regime shift as noted by Saxo Bank.

Gold’s allocation in global investor portfolios stays modest, offering scope for further growth given supply constraints.

Underlying Pressures

Fiat currencies encounter progressive strain from normalized deficits, fiscal dominance, and political influences on monetary policy, repositioning gold as more than an inflation buffer.

Elevated debt levels challenge policy credibility, while geopolitical factors like sanctions embed long-term risks.

Analyses from firms like JP Morgan highlight a flow-based framework where sustained demand underpins price elevation, exacerbated by stagflation concerns.

Demand Category	Q3 2025 Volume	Year-to-Date Trends
Central Banks	220 tonnes	634 tonnes, exceeding pre-2022 averages
ETFs/Investment	537 tonnes	$108B annualized inflows
Total Demand Factors	Multi-source drivers	60% year-to-date return

2026 Outlook and Risks

The World Gold Council projects rangebound trading in 2026 if economic growth stabilizes and geopolitical pressures ease, with possible 5-20% corrections tied to ETF outflows.

JP Morgan anticipates averages near $5,055 per ounce by late 2026, fueled by rate reductions and central bank activity, though reflation or dollar strength might erode risk premiums.

Core dynamics like reserve diversification persist irrespective of near-term fluctuations.

Key Takeaways

• Gold’s 2025 advance integrated cyclical and structural elements, as confirmed by World Gold Council models.

• Central bank acquisitions provide a demand foundation amid de-dollarization, led by emerging markets.

• Market participants track ETF flows and policy developments; historical patterns reveal volatility even within upward trends.

Note: Data reflects late 2025 reports; prices vary continuously. Consult primary sources such as the World Gold Council or official exchanges for the most recent information.

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