Author: Matthew Collom

With ongoing uncertainty in global financial markets, governments are exploring new strategies to stimulate their domestic economies. In the UK, this has sparked discussions about potentially reshaping the popular Individual Savings Account (ISA) system — and some analysts believe gold could emerge as a compelling alternative savings vehicle.

Currently, UK investors can contribute up to £20,000 annually to ISAs without paying income or capital gains tax. However, the government is reportedly considering a proposal to reduce the contribution limit for cash ISAs to £10,000. The goal: encourage greater investment in UK-listed equities.

The proposal, put forward by New Financial — a financial markets think tank — argues that cash ISAs may be “too successful,” with savers hoarding nearly £300 billion collectively. Their report estimates that capping cash ISA contributions could redirect around £10 billion a year into UK equities, supporting broader economic growth.

“Stocks & shares ISAs have arguably not been particularly successful in building a broad-based investment culture despite the uniquely generous tax breaks they offer,” the report notes. “Cash ISAs may be encouraging too many people to save too much, when investing part of these savings might be more beneficial in the long run.”

Still, the idea faces skepticism. Critics argue that the move could undermine individual financial stability — especially for those uncomfortable with equity market volatility.

Paul Williams, Managing Director at UK-based bullion firm Solomon Global, sees a different outcome: a surge in gold investment.

“The proposal to cap cash ISAs might work well for the equity markets and give Chancellor Rachel Reeves a political win,” Williams told Kitco. “But for everyday savers, it offers little reassurance. Shares may grow over time, but not everyone wants the stress of market swings just to preserve their tax benefits.”

Williams adds that if the cap is implemented, more savers may turn to physical gold — particularly Capital Gains Tax-free legal tender coins such as Sovereigns, Britannias, and the Queen’s Beasts series — as a straightforward alternative. “Gold isn’t just about return,” he said. “It’s about preserving wealth, outside government whims.”

Evidence suggests this shift is already underway. According to the Royal Mint, physical bullion demand has surged. Bullion coin sales revenue rose 46% in Q1 2025 compared to the previous quarter — and a staggering 306% over Q4 of the 2023/24 financial year.

“Demand was driven by a combination of price momentum — gold reached all-time highs in GBP 17 times during the quarter — and the appeal of CGT-exempt bullion coins as a tax-efficient investment,” said Stuart O’Reilly, Market Insight Manager at the Royal Mint.

While second-quarter sales have moderated, the Mint remains on track for its second-best online bullion coin sales quarter ever. O’Reilly noted a robust two-way market, with increased selling driven by profit-taking — though purchases are still far outpacing sales, at a ratio of £6 bought for every £1 sold.

As the UK weighs changes to its savings framework, gold appears poised to play a growing role — offering a timeless hedge against inflation, volatility, and now, policy shifts.

U.S. stock futures rose slightly Thursday, with the S&P 500 approaching record highs. Meanwhile, former President Donald Trump is reportedly considering replacing Federal Reserve Chair Jerome Powell amid ongoing dissatisfaction with the Fed’s measured policy approach. Elsewhere, shares of Chinese EV leader BYD declined following reports of reduced production, and Shell has denied rumors of a potential acquisition of rival BP.

U.S. Futures Inch Higher

Stock futures pointed to modest gains early Thursday. As of 03:10 ET, Dow futures were up 84 points (+0.2%), S&P 500 futures rose 14 points (+0.2%), and Nasdaq 100 futures climbed 74 points (+0.3%).

Wall Street ended Wednesday’s session mixed, breaking a two-day rally. Investors were weighing geopolitical developments, including a possible ceasefire between Israel and Iran, alongside Federal Reserve Chair Jerome Powell’s testimony to Congress.

Attention is now on Friday’s release of the Personal Consumption Expenditures (PCE) price index — the Fed’s preferred inflation gauge. Powell reiterated a cautious, data-dependent approach on rate decisions, emphasizing economic uncertainty, especially amid the effects of U.S. tariffs.

“Markets appear to be trusting the ceasefire […], and the dollar is retesting its lows. U.S. data is likely to take center stage now, especially given Powell’s subtly dovish tone,” ING analysts noted.

Trump Weighs Replacing Fed Chair Powell

Former President Donald Trump is reportedly narrowing down a list of candidates to replace Jerome Powell as head of the Federal Reserve. Trump has repeatedly criticized Powell’s reluctance to cut interest rates more aggressively, claiming it’s costing the federal government hundreds of billions in interest payments.

According to The Wall Street Journal, Trump could announce a replacement as early as this summer, though September or October is more likely. His remarks on Wednesday even included questions about Powell’s mental fitness, intensifying speculation over a leadership shake-up at the central bank.

BYD Stock Drops on Production Slowdown

Shares of BYD Co. (SZ:002594), one of China’s top electric vehicle manufacturers, fell over 2% following a Reuters report stating the company has scaled back production and delayed expansion efforts.

Citing sources familiar with the matter, the report said BYD had canceled night shifts and reduced output by at least one-third at four Chinese plants. Plans to install new production lines were also postponed as the company deals with rising inventory levels and cost pressures.

Despite surpassing Tesla in 2023 with record sales of 4.27 million vehicles — and a 2024 target of 5.5 million — BYD faces growing competition and shrinking margins in a crowded EV market.

Shell Denies Plans to Acquire BP

Shell has denied media reports suggesting it is considering a takeover of BP. In an official statement, the oil giant said it has not made an approach and has no intention of making an offer.

Under U.K. takeover rules, this public denial now restricts Shell from making a formal bid for BP for six months.

“Shell wishes to clarify that it has not been actively considering making an offer for BP and confirms it has not made an approach nor held discussions,” the company stated.

The Wall Street Journal had previously reported that Shell was in early discussions about a possible acquisition of BP, citing sources familiar with the situation.

Oil Prices Rise on Inventory Drawdown

Crude oil prices edged higher following news of a larger-than-expected drop in U.S. stockpiles, a sign of robust demand.

By 03:15 ET, Brent crude was up 0.2% at $66.54 per barrel, while West Texas Intermediate (WTI) rose 0.1% to $65.00.

Both benchmarks gained nearly 1% on Wednesday, bouncing back from earlier losses after data from the Energy Information Administration showed U.S. crude inventories dropped for a fifth consecutive week—by 5.8 million barrels. Gasoline stockpiles also declined by 2.1 million barrels, with demand reaching its highest level since December 2021.

U.S. stocks advanced Tuesday amid renewed optimism over a ceasefire between Israel and Iran, while investors weighed remarks from Federal Reserve Chair Jerome Powell.

As of 09:35 ET, the Dow Jones Industrial Average rose 320 points, or 0.8%. The S&P 500 gained 43 points, or 0.7%, and the NASDAQ Composite climbed 200 points, or 1.0%.

Markets Lifted by Ceasefire Developments

Investor sentiment improved after U.S. President Donald Trump announced via social media that a ceasefire between Israel and Iran was “in effect,” cautioning both sides against breaching the agreement.

The ceasefire raised hopes of an end to nearly two weeks of escalating conflict, though its durability remains uncertain. Trump later criticized Israel’s military actions post-agreement, accusing both sides of violations shortly after the announcement.

“I didn’t like the fact that Israel unloaded right after we made the deal,” Trump said Tuesday. “The retaliation was very strong.”

Israel’s Defense Minister, Israel Katz, confirmed new strikes on Tehran, citing alleged Iranian missile launches as a breach of the ceasefire—claims Iran has denied. Tehran stated Israeli attacks persisted for over an hour after the ceasefire was meant to take effect.

Fed Chair Powell Reiterates Caution on Rates

Meanwhile, Fed Chair Jerome Powell addressed Congress as part of his Semiannual Monetary Policy Report, signaling the central bank will remain patient on rate moves.

Powell noted that recent tariff hikes may temporarily boost inflation but cautioned against premature action.

“Increases in tariffs this year are likely to push up prices and weigh on economic activity,” Powell said. “It is also possible that the inflationary effects could be more persistent… For now, we are well positioned to wait.”

His comments align with the Fed’s latest policy decision to hold interest rates steady at 4.25%–4.5%, with no immediate indication of cuts. However, two Trump-appointed Fed governors recently suggested rate reductions could be on the table by July if inflation remains subdued.

Trump continues to press for aggressive rate cuts, stating, “We should be at least two to three points lower,” and called Powell “a very dumb, hardheaded person” in a social media post.

Corporate Movers: Tesla Gains, Chewy and KB Home Decline

Tesla (NASDAQ: TSLA) extended Monday’s gains after launching its long-anticipated Robotaxi service in Austin, Texas, with 10–20 Model Y vehicles.

Chewy (NYSE: CHWY) shares dropped following its announcement of a $1 billion public offering of Class A shares through JPMorgan. The company also revealed a $100 million share buyback plan.

KB Home (NYSE: KBH) declined after cutting its full-year revenue guidance to $6.3–$6.5 billion, down from its previous forecast of $6.6–$7 billion.

Oil Prices Slide as Geopolitical Tensions Ease

Crude prices retreated on signs of de-escalation in the Middle East, easing concerns over potential disruptions to global oil supplies.

By 09:35 ET, Brent crude was down 4.7% at $67.24 a barrel, while U.S. West Texas Intermediate fell 4.6% to $65.36. The drop followed a sharp 7% decline in the prior session after U.S. strikes on Iranian nuclear facilities pushed prices to five-month highs.

As OPEC’s third-largest oil producer, Iran’s ability to maintain exports amid reduced tensions could further stabilize global supply.

U.S. stock futures pointed to a higher open on Tuesday as markets responded positively to President Donald Trump’s announcement of a ceasefire between Israel and Iran. While the news helped ease concerns over a broader conflict in the Middle East, doubts remain about the ceasefire’s long-term viability. Meanwhile, Federal Reserve Chair Jerome Powell is set to testify before Congress this week, drawing investor focus as political pressure on the Fed intensifies. Oil and gold prices declined as geopolitical tensions began to cool.

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U.S. Futures Climb

Stock futures rose early Tuesday, supported by optimism that hostilities between Israel and Iran may be easing. As of 03:40 ET (07:40 GMT), Dow Jones futures were up 347 points (0.7%), S&P 500 futures rose 48 points (0.8%), and Nasdaq 100 futures gained 234 points (1.0%).

Wall Street ended Monday in positive territory, fueled by hopes that the United States would avoid deeper involvement in the Israel-Iran conflict. Over the weekend, fears had grown that U.S. strikes on Iranian nuclear sites could trigger a broader war and disrupt oil supplies. On Monday night, Iran fired missiles at a U.S. military base in Qatar, but no injuries were reported. President Trump dismissed the attack as a “weak” response.

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Trump Declares Ceasefire

President Trump announced that a ceasefire between Israel and Iran is “now in effect,” and urged both sides to comply. While the declaration raised hopes of an end to the 12-day conflict, violence has not fully subsided.

An Iranian missile attack on Israel killed four people on Tuesday, according to Israeli emergency services. At the same time, Tehran reported that an Israeli airstrike in northern Iran had killed nine people. Trump indicated that the ceasefire would be phased in, allowing ongoing operations to be completed.

Israeli Prime Minister Benjamin Netanyahu confirmed Israel’s agreement to halt its campaign, claiming that its objectives had been met. Iranian Foreign Minister Abbas Araqchi said Tehran had no plans for further retaliation unless provoked, a stance Netanyahu echoed.

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Oil Prices Tumble

Oil prices dropped sharply following the ceasefire news, as fears eased over potential disruptions to crude shipments through the Strait of Hormuz—a critical global oil transit route.

As of 03:16 ET, Brent crude futures had fallen 3.7% to $67.93 per barrel, while West Texas Intermediate (WTI) futures were down 3.6% at $66.04 per barrel. Both benchmarks hit their lowest levels since before the recent escalation. Oil had already declined 9% on Monday amid signs of de-escalation.

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Gold Falls as Risk Appetite Returns

Gold prices declined as demand for safe-haven assets fell in response to the reduced geopolitical risk. Spot gold was down 1.4% to $3,320.57 an ounce by 03:25 ET, its lowest level since June 11. August gold futures slipped 1.8% to $3,334.87.

The U.S. dollar weakened slightly, with the dollar index down 0.4% to 98.06. The euro and Japanese yen strengthened, helped by the decline in oil prices, which benefits net importers like the EU and Japan.

U.S. 10-year Treasury yields remained steady following a small drop on Monday, after a Federal Reserve official signaled support for a possible interest rate cut next month.

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All Eyes on Powell’s Congressional Testimony

Investor focus is shifting from the Middle East to monetary policy in Washington as Federal Reserve Chair Jerome Powell prepares to begin two days of testimony before Congress starting Tuesday.

Powell is expected to face tough questions about the Fed’s decision to leave interest rates unchanged at its last meeting and maintain a cautious stance amid economic uncertainty. President Trump continued his public attacks, calling Powell “a very dumb, hardheaded person” and pushing for aggressive rate cuts of “two to three points.”

Analysts at ING warned that any perceived change in Powell’s tone could be interpreted as a sign that the Fed’s independence is being undermined by political pressure—a scenario that could lead to sharp declines in the U.S. dollar.

U.S. equity futures were largely unchanged on Monday, while oil prices moved higher following sudden American airstrikes on Iranian nuclear sites over the weekend. Investors are now closely monitoring how Tehran might respond — a move that could have serious implications for global oil supplies and geopolitical stability. Meanwhile, attention is also turning to upcoming economic indicators and U.S. fiscal policy developments.

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Markets Cautious as U.S. Strikes Heighten Tensions

As of 08:36 BST (03:36 ET), Dow Jones futures slipped by 25 points (0.1%), with S&P 500 and Nasdaq 100 futures holding steady. On Friday, Wall Street ended the week in negative territory, as escalating conflict between Israel and Iran — and possible U.S. military involvement — rattled investor sentiment.

U.S. President Donald Trump confirmed targeted strikes on three Iranian nuclear facilities over the weekend. The move followed earlier suggestions that the decision could be delayed by up to two weeks. Markets are now assessing the broader impact on inflation, interest rates, and overall risk appetite.

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Oil Prices Rise on Supply Fears

Brent crude futures for August delivery rose 0.8% to $76.11 a barrel, while U.S. benchmark WTI crude gained 0.9% to $74.48, as of early Monday morning. The gains reflect growing concerns that further escalation in the Middle East — particularly involving the vital Strait of Hormuz — could significantly disrupt global oil flows.

“Since the U.S. targeted Iranian nuclear facilities over the weekend, supply risks for energy markets have increased significantly,” said Warren Patterson, Head of Commodities Strategy at ING.

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Focus on Iran’s Retaliation

Iran has yet to provide a detailed response but has vowed “everlasting consequences.” Tehran has ramped up airstrikes against Israel and suggested the U.S. decision has widened the scope of its possible targets. State media have floated the possibility of blocking the Strait of Hormuz — a crucial chokepoint for global energy shipments — or attacking American military bases in the region.

While geopolitical uncertainty remains high, some analysts say Trump’s definitive move has lifted a cloud of uncertainty over the markets. Still, they caution that lingering concerns about trade policy and fiscal issues will continue to weigh on investor confidence.

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U.S. Senate Set to Vote on Major Fiscal Package

Republican senators are pushing to pass their version of a broad tax-and-spending bill this week, with the aim of sending it to President Trump’s desk before 4 July. The proposed legislation would extend the 2017 tax cuts and increase military and border security spending, partly offset by cuts to social programmes such as Medicaid.

However, the Senate’s rules adviser has flagged several items — including proposed cuts to financial regulators — as non-compliant with budgetary procedure, potentially complicating the path forward.

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Key U.S. Data in Focus: PMIs and Inflation

Markets will also be closely watching incoming economic data from the U.S. this week. The S&P Global Purchasing Managers’ Index (PMI) for June is expected to show a slight slowdown in activity, with the manufacturing reading forecast to fall to 51.1 and services to 52.9.

These figures precede more important indicators due later in the week, including consumer confidence on Tuesday and a core inflation gauge closely monitored by the Federal Reserve on Friday.

While American consumer sentiment has been weakening due to ongoing trade concerns, inflation remains contained — giving some hope that interest rate cuts could still be on the table later this year.

U.S. stock futures ticked lower amid growing investor anxiety over potential U.S. military involvement in the escalating conflict between Israel and Iran. The White House confirmed that President Donald Trump will decide on any action within two weeks. Meanwhile, European diplomats are holding talks with Iranian officials in an effort to de-escalate the situation. Despite Friday’s dip, Brent crude remains on pace for a weekly gain as supply disruption fears persist.

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1. Stock Futures Edge Down

Markets opened Friday with modest losses as the conflict between Israel and Iran entered its second week. As of 03:36 ET:

• Dow futures were down 89 points (0.2%)
• S&P 500 futures fell by 10 points (0.2%)
• Nasdaq 100 futures declined 32 points (0.1%)

With U.S. markets closed Thursday for a public holiday, global equities slipped and the U.S. dollar strengthened as investors sought safe-haven assets amid geopolitical tensions.

Traders are also weighing recent decisions from several central banks, including the Bank of England, Norges Bank, and Swiss National Bank. On Wednesday, the Federal Reserve left interest rates unchanged and signaled a cautious approach going forward, as uncertainty around Trump’s trade policies continues to cloud the economic outlook.

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2. Trump to Make Iran Decision Within Two Weeks

President Trump is expected to decide within two weeks whether the U.S. will support Israel’s airstrikes on Iran, according to White House Press Secretary Karoline Leavitt. She pointed to a possible window for diplomatic talks with Iran but did not confirm if congressional approval would be sought before any military engagement.

Earlier in the week, Trump stated he “may or may not” target Iranian nuclear facilities. The conflict began with Israeli strikes on Iran’s nuclear sites, which Tehran responded to, insisting its program is peaceful. With tensions showing no sign of easing, European foreign ministers are scheduled to meet with Iranian officials in Geneva on Friday.

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3. Oil Retreats, But Weekly Gains Hold

Brent crude futures slipped 2.3% to $77.02 per barrel by 03:38 ET, while West Texas Intermediate dropped 0.1% to $73.84. Despite the decline, Brent remains on track for a third consecutive weekly gain. Oil prices had surged nearly 3% on Thursday during light trading due to the U.S. holiday.

The market remains on edge over the risk that the conflict could escalate and disrupt oil supplies, particularly through the critical Strait of Hormuz. ING analysts noted that investors continue to evaluate the likelihood of direct U.S. involvement.

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4. Home Depot Reportedly Pursuing GMS – WSJ

Home Depot (NYSE:HD) is making a bid to acquire building materials distributor GMS (NYSE:GMS), according to a Wall Street Journal report citing sources familiar with the matter. The offer price remains undisclosed, but shares of GMS surged in after-hours trading.

Earlier this week, Brad Jacobs’ QXO made an unsolicited $5 billion cash offer for GMS, valuing shares at $95.20 each. Based in Georgia, GMS has attracted takeover interest amid increased housing demand, despite economic uncertainty stemming from tariffs.

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5. SoftBank Seeks to Build $1 Trillion AI Complex in U.S.

SoftBank founder Masayoshi Son is proposing a partnership with chipmaker TSMC and the Trump administration to establish a $1 trillion AI-focused manufacturing hub in the U.S., according to Bloomberg News.

The project, named “Project Crystal Land,” would focus on building AI-powered industrial robots and revitalizing high-tech manufacturing in the U.S.—a key priority for the Trump administration. Son has reportedly discussed tax incentives with Commerce Secretary Howard Lutnick and is in talks with other tech companies. TSMC’s involvement has yet to be confirmed.

Asian stock markets dropped sharply on Thursday, with major losses in Japan and Hong Kong, as investors reacted to rising geopolitical tensions. The downturn came after reports suggested the United States was preparing for a potential military strike on Iran.

U.S. stock futures also fell during Asian trading hours, reflecting growing caution ahead of developments in the Israel-Iran conflict.

Investors were also closely watching the Federal Reserve’s latest decision on interest rates and comments from Chair Jerome Powell regarding inflation driven by trade tariffs.

Hong Kong Stocks Drop Over 1% Amid Heightened Conflict Fears

Investor sentiment weakened further following a Bloomberg report that senior U.S. officials were discussing the possibility of a military strike on Iran as early as this weekend, signaling a potential escalation in the conflict.

President Donald Trump added to the uncertainty, stating Wednesday that he had “ideas” but would decide “one second before it’s due,” fueling market volatility. He said the U.S. may or may not take military action.

Tensions escalated further after Iran’s Supreme Leader, Ayatollah Ali Khamenei, rejected Trump’s demands for unconditional surrender and declared that neither peace nor war could be imposed on the country.

At the same time, the Federal Reserve held interest rates steady and Powell warned that inflation caused by trade tariffs could accelerate over the summer, further dampening risk appetite.

Regional Stock Market Performance

• Hong Kong’s Hang Seng Index fell over 1%, extending losses from the previous session.
• Japan’s Nikkei 225 declined 0.7%, and the TOPIX Index slipped 0.6%.
• China’s Shanghai Composite edged down 0.3%, while the CSI 300 dropped 0.2%.
• South Korea’s KOSPI slid 0.5%.
• Singapore’s Straits Times Index dipped 0.2%.
• India’s Nifty 50 futures fell 0.2%.
• Indonesia’s Jakarta Composite Index dropped more than 1%.

Australian Market Flat Despite Weak Jobs Report

Australia’s S&P/ASX 200 was mostly unchanged. New data showed an unexpected decline in employment during May, though the jobless rate held steady. While the labor market remains relatively tight, the figures may give the Reserve Bank of Australia more room to consider future rate cuts.

• Gold attempts to recover from weekly lows near $3,360 in light Thursday trading.
• Renewed safe-haven demand for the US Dollar follows reports of potential US military action against Iran.
• Despite breaking below the key $3,377 support after the Fed’s hawkish pause, Gold’s RSI remains in bullish territory.

Gold prices are attracting fresh buying interest around the weekly low of $3,363 on Thursday, as intensifying geopolitical tensions in the Middle East overshadow the US Federal Reserve’s hawkish policy stance.

Rebound in Progress: Will It Hold?

Risk sentiment took a hit during the Asian session following media reports suggesting the US is considering military strikes on Iran—possibly as soon as this weekend. President Joe Biden is reportedly weighing an attack on Iran’s heavily fortified Fordow nuclear facility, raising fears of a broader regional conflict.

This comes after Iranian Supreme Leader Ayatollah Ali Khamenei warned on Wednesday that any US military intervention would bring “irreparable damage” to America and rejected any prospect of backing down.

These renewed tensions have revived demand for traditional safe-haven assets like gold. However, the US Dollar—also considered a safe-haven—is gaining momentum, limiting gold’s upside potential.

The dollar continues to strengthen, supported by the Fed’s recent policy update. The central bank held interest rates steady at 4.25%-4.5%, in line with expectations, and maintained its forecast for two rate cuts in 2025. However, it scaled back projections for additional cuts in 2026 and 2027, while raising its inflation outlook and cutting growth estimates.

Markets interpreted this as a moderately hawkish stance, which weighed on gold—an asset that does not yield interest.

Key Technical Levels and Outlook

Following the Fed’s decision, gold dropped below the key $3,377 support level and closed beneath it on Wednesday. However, thin liquidity due to the Juneteenth holiday in the US could exaggerate price swings in the short term.

From a technical standpoint, gold retains a bullish bias. The 14-day Relative Strength Index (RSI) remains above the neutral 50 mark, currently around 55. For bulls to regain control, gold needs to reclaim $3,377—a level that also represents the 23.6% Fibonacci retracement of the record April rally.

A sustained move above that level would open the door to $3,400, followed by resistance at $3,440. A breakout beyond that point could test the two-month high near $3,453.

On the downside, if the rebound fails, sellers may step in. Initial support lies at the 21-day Simple Moving Average (SMA) near $3,348, with stronger support at the 50-day SMA around $3,308.

Bottom Line

While geopolitical tensions continue to support gold prices, the strength of the US Dollar and the Fed’s more hawkish outlook are key headwinds. Market focus will remain on developments in the Middle East, as further escalation could drive increased demand for gold as a safe-haven asset.

In his latest research note for Solomon Global, contributing analyst Nick Cawley explains why the Federal Reserve is expected to hold interest rates steady this week — and how escalating geopolitical tensions are reinforcing gold’s status as a safe-haven asset.

With markets pricing in a near-100% probability that the Fed will leave rates unchanged at 4.25%–4.50%, attention is turning to Chair Powell’s post-meeting comments and the updated ‘dot plot’ for clues on future policy shifts. Despite moderating inflation and a strong jobs market, concerns persist around the delayed impact of the “Liberation Day” tariffs announced by President Trump, which could drive inflation higher in the coming months.

Cawley also highlights the intensifying conflict between Israel and Iran, which continues to underpin demand for safe-haven assets. With tensions escalating and military action spreading, investor appetite for gold remains strong.

“If gold breaks and closes above its prior all-time high at $3,500/oz, price discovery should drive the precious metal to test round numbers at $3,600/oz and $3,700/oz.,” notes Cawley, contributing analyst for Solomon Global.

To download and read Nick Cawley’s full market analysis and gold outlook, click here

Gold has surpassed the euro to become the world’s second most significant reserve asset after the U.S. dollar, according to the European Central Bank (ECB). This shift comes amid record-breaking gold purchases and surging prices.

In its annual currency review released Wednesday, the ECB reported that gold accounted for roughly 20% of global official reserves by the end of 2024, overtaking the euro’s 16% share. The U.S. dollar retained its dominant position at 46%, although its share has been gradually declining.

“Central banks continued to accumulate gold at a record pace,” the ECB stated. In 2024, global gold purchases by central banks exceeded 1,000 tonnes for the third consecutive year—double the average annual pace seen during the 2010s.

Global central bank gold holdings are now nearing levels not seen since the Bretton Woods era. Back in the mid-1960s, reserves peaked at around 38,000 tonnes; by the end of 2024, they stood at 36,000 tonnes, according to the ECB.

The World Gold Council identified Poland, Turkey, India, and China as the leading buyers in 2024, collectively responsible for about 25% of all central bank gold acquisitions.

The ECB attributed gold’s growing prominence in global reserves partly to its rising price, which jumped nearly 30% over the year and hit a record $3,500 per ounce in April 2025.

Geopolitical Tensions Fuel De-Dollarization

The report also highlights how geopolitical instability has driven central banks to diversify away from the U.S. dollar. Gold, often viewed as a safe-haven asset, has become a preferred alternative.

Gold demand surged after Russia’s invasion of Ukraine in 2022, the ECB noted, adding that bullion has historically served as a shield against potential sanctions, particularly since 1999.

An ECB survey revealed that about two-thirds of central banks cited diversification as a key reason for increasing gold reserves, while two-fifths pointed to geopolitical risk.

The ECB observed a significant uptick in gold holdings among countries closely aligned with China and Russia, especially since the final quarter of 2021. This trend reflects a broader movement of de-dollarization across many developing nations.

Interestingly, the longstanding inverse correlation between gold prices and real interest rates began to break down in 2022. The shift, the ECB suggests, came as central banks prioritized gold as a hedge against sanctions rather than inflation.

Looking ahead, the trend is expected to persist. According to the ECB’s survey, 80% of reserve managers consider geopolitical concerns a critical factor in shaping their gold strategy over the next five to ten years.