Gold Buying by Central Banks Up 10 % in Q3 - What It Means

This surge underscores that despite the increased prices, the official sector, meaning government and central banks, remains deeply committed to gold. Although not the most preferred reserve asset, silver is seeing substantial pipeline demand from investment and industry. The question for investors remains: what does this renewed appetite for gold really signal for global confidence and monetary priorities?

Why Are Institutions Turning to Gold Now?

Several factors explain the renewed momentum in gold accumulation:

• Strategic reserve diversification: Central banks are reducing their reliance on USD-denominated assets to offset currency, inflation, and geopolitical risk.
  
• Elevated prices do not deter strategic buyers: Robust prices have failed to discourage central banks, which added about 220 tonnes of gold in Q3 ~28% more than the prior quarter. Continued buying provides price support, though short-term corrections remain possible.
  
• Safe-haven demand and macro uncertainty: With macroeconomic shifts, currency stress, and trade tensions, gold's status as a non-yielding but liquid store of wealth is being re-evaluated.
  

Key Data Points

• Net gold purchases by central banks in Q3 2025: 220 tonnes, up 28% from the prior quarter.
  
• Year-to-date through Q3: 634 tonnes added by central banks, slightly below 724 tonnes in the first three quarters of 2024.
  
• On the silver side: India’s silver imports in the first eight months of 2025 were 2,580 tonnes (down from 5,695 tonnes a year earlier), but are expected to rise as investment and industrial demand intensify.
  
• Also, analysts see silver’s long-term potential; for example, an ET piece suggests silver could offer up to 50% return over one year despite short-term volatility. What Does This Mean for the Markets?
  

For gold:

• The official sector accumulation offers a structural demand base on the metal, which is extremely unlikely to be corrected.
  
• Since central banks are often price-insensitive and act on long-term goals, their purchases will limit other buyers.
  
• Gold continues to play a crucial role for investors in more than just jewellery and retail; it is also as a sovereign reserve approach.
  

For silver:

• Serving as both an investment vehicle and an industrial staple, silver’s outlook remains supported by constrained supply and accelerating use in clean energy and electronics.
  
• However, silver is more volatile and less of a “reserve asset” than gold, so its short-term behaviour may diverge.
  
• The import and duty structure in key markets like India also affects supply/demand and pricing dynamics.
  

Challenges And Watch-Points

• About two-thirds of Q3 official-sector gold purchases came from central banks that do not publicly report their buying activity, in line with recent trends.
  
• Higher prices may reduce jewellery and retail demand, for example, Indian gold jewellery demand fell 31% year-on-year in Q3, though investment demand rose.
  
• Both metals are sensitive to central-bank policy, currency moves (especially USD), interest-rate expectations and trade flows.
  

Future Outlook

• Incremental purchases of gold by central banks are destined to go on, possibly being more discriminatory, but with long-term purpose.
  
• In the case of silver, due to the interaction of the industrial demand (EVs, solar), investment flows, and supply constraints, there is a possibility of an upward trend, though with increased volatility.
  
• Reserve-strategy themes (diversify off major currencies, inflation hedging, geopolitical risk) will be dominant in both cases.
  
• It will be essential to observe essential data releases (central-bank releases, import/export data) to form an opinion of the changes in demand.
  

Conclusion

The cumulative positive growth in central bank gold purchases and the industrial resurgence of silver portray the transformation in world asset policies in the face of a new macroeconomic environment. However, it seems that long term stability and not market timing in the short run is being emphasised by central banks with gold acting as a source of stability.

To investors, such actions act as a reminder that, besides being a commodity, gold and silver are essential components of global economic insurance. The target of the discussion now moves to Q4: will the rate of accumulation by the central bank remain constant or might profit-taking and monetary responses slow the acceleration into 2026?

Reference:

The Economic Times
World Gold Council
Business Today