Gold Surges Past $3,600, Reinforcing Its Role as the World’s Top Hedge

Gold has once again affirmed its position as the strongest hedge in the global economy, breaking the $3,600 per ounce barrier for the first time in history. This record rally is not a sudden event but rather the result of cumulative factors: rising inflationary pressures, declining confidence in the U.S. dollar, and the accelerating pace of central bank gold purchases as a strategic alternative to U.S. Treasuries.

Although the recent sharp gains caught many investors’ attention, analysts stressed that the drivers behind gold’s rise had been clear for some time. Gold often experiences extended periods of calm before surging, and with this latest move, the $3,500 level has now become a new key support, after earlier consensus had expected prices to consolidate around $3,350.

Solid Fundamentals Driving the Rally

The current upswing is not driven by speculative trading but rather by a growing loss of confidence in the U.S. economy, marked by surging government debt, mounting inflationary pressures, and slowing economic activity. As a result, markets have turned to gold as a safe store of value amid these challenges.

Central banks have played a pivotal role in sustaining the rally, with strong purchases reflecting their strategy of reducing reliance on the dollar and diversifying reserves.

Central Banks at the Forefront

For the first time since 1996, global central banks’ gold holdings have exceeded their investments in U.S. Treasuries. This milestone marks the beginning of a new cycle of sovereign demand for gold, with the potential for gold to account for up to 80% of total global reserves.

One striking example is the Central Bank of El Salvador, which this week announced its first gold purchase in more than 30 years, acquiring 13,999 ounces worth $50 million. Notably, the bank stated that the purchase was funded through returns on its Bitcoin reserves, which have grown by about $400 million over the past two years, now valued at roughly $698 million.

In Europe, the Polish central bank has emerged as one of the most active buyers in recent years, raising its gold reserves to 20% of total assets. Although it temporarily paused buying after reaching this threshold, Governor Adam Glapiński recently hinted that the target ceiling could be raised to 30%.

Market Outlook

Analysts emphasize that sovereign demand provides gold with genuine and lasting value, and that current price levels—while historic—do not indicate an “overvaluation.”

Thus, gold continues to strengthen its role as the world’s most trusted safe-haven asset amid global macroeconomic uncertainty, with expectations that the wave of central bank buying will persist in the coming period.