El Salvador has bought nearly $50 million in gold, its first purchase since 1990. The central bank has added 13,999 ounces, raising its total to 58,105 ounces, worth around $207 million. This purchase comes at a time when gold prices are high, trading close to record levels of about $3,600 an ounce. This is a 36% increase this year due to strong demand from central banks. Analysts believe this move may stabilize El Salvador’s finances and reassure global partners amidst Bitcoin’s volatility.

Central Banks Increasing Gold Reserves

In July 2025, the country’s reserves rose to $4.7 billion from $3 billion the year before, with approximately $700 million still in Bitcoin. Central banks around the world are buying more gold, making it the second-largest reserve asset after the US dollar. Goldman Sachs predicts gold prices could reach $5,000 if this trend continues. We recommend prioritizing long positions on gold in the coming weeks. There’s a strong, ongoing trend as central banks set purchasing records in 2023 and 2024, which creates a solid price floor. With strong momentum and high institutional demand, buying call options on gold futures or related ETFs seems wise. El Salvador’s shift away from solely focusing on Bitcoin is important for the digital assets landscape. As a leader in cryptocurrency adoption, this diversification shows a preference for stability over high-risk growth. It may be wise to reduce exposure to Bitcoin, suggesting that buying put options could serve as a hedge against changing market sentiments. This global interest in gold by central banks also signals a move away from holding U.S. dollars. We have seen this trend grow due to geopolitical tensions that started earlier in the decade, with non-allied countries boosting their gold reserves. Therefore, we should watch for potential dollar weakness and consider trades that benefit from a declining U.S. Dollar Index (DXY).

Market Trends and Investment Strategies

The market is clearly differentiating between gold as a safe asset and Bitcoin as a risky investment. In the options market, implied volatility for Bitcoin derivatives has historically been five to ten times higher than for gold. This difference supports strategies like a pairs trade: going long on gold while shorting Bitcoin to benefit from a flight to safety. Create your live VT Markets account and start trading now.

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