GLD's $141 Billion Rally Hinges on Continued Central Bank Buying

"Precious metals are normally sleepy, low return investments. Usually the case for owning them is some version of an inflation hedge or building out additional portfolio allocations. But, with a 62% gain in 2025, the SPDR Gold Trust has quietly delivered one of the year's best investment performances. The question is whether the rally has room to run or if momentum is exhausted. That answer lies in two forces: the macro tide lifting gold broadly, and the micro mechanics of how GLD operates."

"Gold's 2025 rally isn't driven by retail sentiment or inflation panic. It's structural. Central banks purchased 53 tonnes of gold in October 2025, bringing year-to-date reported buying to 254 tonnes, according to the World Gold Council. Poland added 16 tonnes in October after pausing since May, lifting its reserves to 531 tonnes. Brazil bought for the second consecutive month. These aren't opportunistic trades. They're strategic reserve shifts."

"Gold surged to record highs above $4,300 per ounce after the Fed's final 2025 rate cut in December. Goldman Sachs now forecasts gold at $4,900 per ounce by the end of 2026, citing persistent central bank demand and macroeconomic uncertainty. IAU, the iShares Gold Trust, offers the same physical gold exposure with a 0.25% expense ratio versus GLD's 0.40%. Over five years, IAU has delivered a 10.48% annualized return compared to GLD's 10.30%, purely due to lower fees."

Gold's 2025 surge has produced a 62% gain in the SPDR Gold Trust (GLD). Central banks purchased 53 tonnes in October 2025, bringing year-to-date reported buying to 254 tonnes, reflecting strategic reserve shifts from countries like Poland, Brazil, and potential entrants such as Serbia. Federal Reserve rate cuts and forward guidance pushed gold above $4,300 per ounce, and Goldman Sachs forecasts $4,900 per ounce by end-2026. Fund mechanics matter: GLD's expense ratio is 0.40% while IAU offers 0.25%, and lower fees contributed to IAU's slightly higher five-year annualized return. Monitor World Gold Council monthly central bank statistics for momentum signals.

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