The Indicator from Planet Money Why is everyone buying gold?
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Oct 1, 2025 Gold is experiencing an unexpected surge, defying its reputation as a boring inflation hedge. A finance expert discusses the influence of central banks, particularly Russia and China, buying gold to safeguard their reserves. China's recent rule change also spurs increased demand from insurers. Additionally, speculative buying related to new banking regulations may impact gold's future. With limited supply and rising investment interest, experts ponder whether this gold rally can maintain its momentum.
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Central Banks Are Leading Buyers
- Campbell Harvey says central banks, especially Russia and China, are major buyers driving gold demand.
- They want assets other countries cannot easily seize after seeing the dollar weaponized post-Ukraine invasion.
China's Insurance Rule Boosts Demand
- China changed rules to let insurance companies hold up to 1% of reserves in gold, creating fresh demand.
- Campbell Harvey estimates that regulatory change represents about $27 billion of buying pressure.
Basel III Speculation Could Explode Demand
- Speculative buyers include investors hoping Basel III will let banks count gold as a high-quality liquid asset.
- If banks allocate even 5% to gold it would cause a demand shock far larger than the ETF-era buying.