GLD’s $141 Billion Rally Hinges on Continued Central Bank Buying

Core Insights - Precious metals, particularly gold, have shown significant performance in 2025, with the SPDR Gold Trust (GLD) achieving a 62% gain, raising questions about the sustainability of this rally [2][5] - Central banks have been major players in the gold market, purchasing 254 tonnes year-to-date through October 2025, indicating a structural demand rather than opportunistic buying [3][5] - Goldman Sachs projects gold prices to reach $4,900 per ounce by the end of 2026, driven by central bank demand and macroeconomic uncertainties [3][7] Central Bank Activity - Central banks bought 53 tonnes of gold in October 2025, with Poland contributing 16 tonnes, reflecting strategic reserve shifts rather than speculative trades [5][6] - The World Gold Council's monthly statistics are crucial for monitoring central bank purchases, as a slowdown could indicate waning confidence, while acceleration would reinforce demand [6] Investment Alternatives - The iShares Gold Trust (IAU) offers a lower expense ratio of 0.25% compared to GLD's 0.40%, making it a more cost-effective option for long-term investors [8] - Over five years, IAU has provided a 10.48% annualized return, slightly outperforming GLD's 10.30% due to lower fees, although GLD's larger asset base makes it preferable for larger trades [8]