Central bank buying of gold has sharply decreased, even though rising gold prices have increased the percentage of reserves held in gold. The theme of dedollarisation continues to be analyzed in the market, but it hasn’t had a major effect on buying trends lately. Recent analysis shows that BRICs+ countries have paused their gold purchases. Instead, Eastern European nations are currently driving central bank inflows, indicating motivations beyond just dedollarisation. The selling by CTAs aiming for volatility control may have reached its peak, but we don’t expect significant future purchases at any price.

The Debasement Trade

The debasement trade has attracted notable investments from macro funds and retail investors, but the risk/reward ratio is not favorable right now. Upcoming Supreme Court hearings could change this. Leveraged positions are impacted by potential government shutdowns, making it hard to measure outflows accurately. Current data from proprietary models and ETFs shows that liquidations have been limited so far. While there is strong interest in buying during perceived dips, the market suggests this might not be the best buying opportunity yet. We believe that a key support factor for gold is weakening, which invites caution for derivatives traders. Central bank purchases have significantly slowed down. The World Gold Council’s Q3 2025 report reveals net purchases dropped to just 90 tonnes, well below the quarterly average of over 200 tonnes seen throughout 2024. The high gold prices have increased the value of existing reserves, reducing the rush for banks to acquire more gold.

Dedollarization Narrative

The popular dedollarization narrative that previously boosted prices seems to be on pause for now. Gold buying from major BRICs+ countries like China has remained flat for four months, while smaller purchases from countries like Poland appear to be more about regional diversification. This suggests that a key macro story supporting long gold positions has lost momentum as we approach the end of the year. While heavy selling from systematic funds likely peaked, we don’t foresee any strong reasons for them to return to aggressive buying. The trade against the US dollar is looking riskier, especially with the upcoming Supreme Court hearings regarding the federal debt ceiling, which could lead to unexpected strength in the dollar. Moreover, major gold ETFs like GLD experienced net outflows of over $1.5 billion in October 2025, indicating that investors are already reducing their exposure. Positioning data is unclear following a brief government shutdown in early October 2025, which delayed important reports. However, our models indicate that many leveraged funds still hold long positions. After reaching above $2,550 an ounce in August, gold’s decline to the current $2,420 level has many eager to buy the dip. Still, with many long positions yet to be liquidated, this may not be the ideal dip to purchase just yet. Create your live VT Markets account and start trading now.

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