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

By Austin Smith Published Dec 15, 7:58AM EST

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Central banks bought 254 tonnes of gold year-to-date through October 2025. Poland added 16 tonnes in October alone.
Goldman Sachs forecasts gold at $4,900 per ounce by end of 2026 citing central bank demand and macro uncertainty.
IAU offers the same physical gold exposure as GLD but charges 0.25% versus GLD’s 0.40% expense ratio.

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GLD’s $141 Billion Rally Hinges on Continued Central Bank Buying — © 24/7 Wall St.

Precious metals are normally sleepy, low return investments. Usually the case for owning them is some version of an inflation hedge or building out additional portfolio allocations. But, with a 62% gain in 2025, the SPDR Gold Trust has quietly delivered one of the year’s best investment performances. The question is whether the rally has room to run or if momentum is exhausted. That answer lies in two forces: the macro tide lifting gold broadly, and the micro mechanics of how GLD operates.

An infographic titled 'GLD: SPDR Gold Trust – A Primer' with a central image of gold bars in a safe over a world map. The infographic is divided into three sections. Section 1, 'How the ETF Works,' states: 'Holds physical gold in secure vaults (London, NY, Zurich),' 'Price tracks LBMA Gold Price with near-perfect correlation,' and 'Uses creation/redemption process to manage liquidity.' Section 2, 'Best Investor Use Case,' lists: 'Strategic, long-term portfolio hedge against macroeconomic uncertainty,' and 'High liquidity suitable for large or frequent trading, despite higher fees than some peers.' Section 3, 'Pros & Cons,' is split. Pros include: 'Precise gold price tracking,' 'Very high liquidity ($141B assets),' and 'Supported by strong central bank demand.' Cons include: 'No income generation,' 'Higher expense ratio (0.40%) vs. lower-cost alternatives,' 'Subject to significant price volatility,' and 'Sensitive to rising real interest rates.' — This infographic provides a primer on GLD, the SPDR Gold Trust ETF, detailing its operational mechanics, best investor use cases, and a comprehensive list of its pros and cons for those considering gold investment.

The Central Bank Bid and What It Signals

Gold’s 2025 rally isn’t driven by retail sentiment or inflation panic. It’s structural. Central banks purchased 53 tonnes of gold in October 2025, bringing year-to-date reported buying to 254 tonnes, according to the World Gold Council. Poland added 16 tonnes in October after pausing since May, lifting its reserves to 531 tonnes. Brazil bought for the second consecutive month. These aren’t opportunistic trades. They’re strategic reserve shifts.

Watch the World Gold Council’s monthly central bank statistics, published around the first week of each month. A slowdown in emerging market purchases, particularly from Poland, Kazakhstan, or Turkey, would signal waning institutional confidence. Any acceleration, or new entrants like Serbia (which recently announced plans to double reserves to 100 tonnes by 2030), would reinforce the structural bid.

And then there is the Federal Reserve forward guidance. Gold surged to record highs above $4,300 per ounce after the Fed’s final 2025 rate cut in December. Goldman Sachs now forecasts gold at $4,900 per ounce by the end of 2026, citing persistent central bank demand and macroeconomic uncertainty.

A Lower-Cost Alternative Worth Considering

IAU, the iShares Gold Trust, offers the same physical gold exposure with a 0.25% expense ratio versus GLD’s 0.40%. Over five years, IAU has delivered a 10.48% annualized return compared to GLD’s 10.30%, purely due to lower fees. On a $50,000 investment held for five years, you’d save $375 in fees with IAU. The trade-off is liquidity. GLD’s $141 billion in assets dwarfs IAU’s $32 billion, making GLD better for large or frequent trades. But for buy-and-hold investors, IAU’s cost advantage is material.

The most important macro factor driving GLD for the next 12 months is whether central bank buying sustains above 50 tonnes monthly.

About the Author Austin Smith →

Austin Smith is a financial publisher with over two decades of experience in the markets. He spent over a decade at The Motley Fool as a senior editor for Fool.com, portfolio advisor for Millionacres, and launched new brands in the personal finance and real estate investing space.

His work has been featured on Fool.com, NPR, CNBC, USA Today, Yahoo Finance, MSN, AOL, Marketwatch, and many other publications. Today he writes for 24/7 Wall St and covers equities, REITs, and ETFs for readers. He is as an advisor to private companies, and co-hosts The AI Investor Podcast.

When not looking for investment opportunities, he can be found skiing, running, or playing soccer with his children. Learn more about me here.