Gold’s stellar performance in 2025 has left its mark on the financial landscape. The yellow metal has surged to a new high 53 times during the year, one of the best performances on record. ETF inflows have surged, foreign reserves have shifted, and central banks have recorded record paper profits.
Record ETF Interest
Investor demand surged through physically backed gold ETFs, with global inflows hitting a record $89 billion in 2025, according to GoldHub. Global ETF assets under management rallied to $559 billion, while physical holdings climbed to a historic 4,025 tons. The leading gold ETF, SPDR Gold Shares (NYSE:GLD), returned 64%.
North America accounted for the majority of inflows ($51 billion), but Europe and Asia also posted some of their strongest performances on record. Europe saw $12 billion of inflows over the year, reversing two consecutive years of losses. Demand was strongest in the UK and Switzerland, where heightened geopolitical risks and currency-hedged products attracted investors.
Meanwhile, Asia recorded $25 billion in inflows, exceeding the region’s cumulative inflows since its first gold ETF listings in 2007. India led regional demand, while China and Japan also added to holdings as higher prices and policy changes encouraged investors to shift from jewellery to ETFs.
The Largest Reserve Asset
Gold’s rally also altered the structure of global reserves. Rising prices and aggressive central-bank buying pushed gold past US Treasuries to become the world’s largest foreign reserve asset for the first time in nearly three decades.
Data from the World Gold Council show the value of gold held by foreign central banks approaching $4 trillion, surpassing their roughly $3.9 trillion holdings of US bonds. This overtake is a milestone in the de-dollarization trend, as institutions gradually pivot away from dollar-denominated assets toward bullion, which carries no counterparty risk.
Central banks remain a key force behind the shift. Despite elevated prices, the organization expects them to have added another 1,000 tons to their reserves in 2025. Growing concerns about the increasingly fragmented global order, fiscal sustainability, and long-term currency stability are contributing to the trend.
Flight To Safety Effect
Higher gold prices also bolstered central-bank balance sheets, most notably in Switzerland. The Swiss National Bank reported a profit of about 26 billion Swiss francs in 2025, supported by a record valuation gain on its gold holdings as the metal’s price surged. However, for UBS economist Alesandro Bee, the flight to safety had a mixed effect for the bank.
“On one hand, it was helped by a big increase in the price of gold, but on the other hand, the Swiss franc – another safe haven – gained in value which turned the gains on foreign equity markets into losses when converted back into francs,” he explained according to Reuters.
Image via Shutterstock
Recent Comments