Central Banks Slow but Still Buy Heavily as Gold Demand Rises 3 %

At its July meeting, the Federal Reserve chose to keep interest rates steady, rejecting President Trump’s calls for a rate cut. The decision came in a 9-2 vote, marking the first time in decades with two dissenting members who favored easing rates, believing inflation was under control. Fed Chair Jerome Powell explained that inflation remains above the 2% target, and the economy’s strength justifies holding rates for now. Recent data shows inflation rose slightly in June, influenced partly by new trade tariffs, which are beginning to affect prices on goods like appliances and groceries.

Gold is experiencing a strong rally, reaching record prices driven by geopolitical tensions, economic uncertainty, and heavy central bank buying. Although the recent gold price highs invite comparisons to the 1980 peak during a period of extreme inflation and political turmoil, today’s economic conditions are different—current inflation and unemployment are lower, and markets are generally healthier. Central banks now actively buy gold, unlike in the 1980s when they were mostly sellers. This shift, combined with rising geopolitical risks, supports gold’s role as a key safe-haven asset, potentially sustaining its high value.

Both President Trump and Democratic leaders are making conflicting and sometimes misleading claims about inflation and price changes during Trump’s current term. Trump says prices for groceries, energy, and eggs have fallen, while Democrats say costs keep rising. Experts note many factors affect prices—like tariffs, weather, disease outbreaks, and global markets—so it’s too soon to fully judge the impact of policies. For instance, grocery and beef prices rose due to tariffs and supply issues, while egg prices fell mainly because the bird flu eased. Gasoline prices are steady but not as low as Trump claims, and electricity costs have gone

The World Gold Council reported that worldwide gold demand (including over‑the‑counter trading) increased 3 % year‑on‑year to 1,248.8 metric tons in Q2 2025. Investment demand jumped 78 % as exchange‑traded funds posted their largest semi‑annual inflows since 2020, offsetting a 14 % slump in jewellery consumption. High prices deterred buyers in China and India, pushing global jewellery demand to its lowest since late‑2020. Central‑bank purchases fell 21 % in the quarter but remained significant at about 166.5 tons.

After the Federal Reserve left its key interest rate unchanged on July 30, former President Donald Trump lashed out at Chair Jerome Powell on social media, calling him “too late” and “too political”. Trump has repeatedly threatened to fire Powell for not cutting rates, yet legal experts note that the president cannot remove the Fed chair without cause because the central bank’s independence is protected by law. Powell himself has said that board members are only removable “for cause” and that bipartisan support makes any change unlikely.