Gold Extends Record Run as Central Bank Purchases Accelerate

Gold prices rose to a fresh record above $2,780 an ounce on Tuesday, extending a rally that has added more than 30% year-to-date. Silver traded alongside at $34.50, its highest level since 2013.

The World Gold Council reported that central bank purchases in the third quarter reached 213 tonnes, up 18% from a year earlier and the strongest quarterly total in the Council's modern dataset. The People's Bank of China resumed reporting purchases after a five-month pause.

"This is a structural bid, not a tactical one," said Eleanor Voss, precious metals analyst at Aurum Research. "Reserve managers are diversifying away from the dollar for reasons that have nothing to do with short-term rate expectations."

ETF flows have turned positive after two years of redemptions, with global gold ETF holdings rising by 41 tonnes in September. North American funds accounted for the majority of the inflows.

Futures positioning shows managed money net longs at 268,000 contracts, near the upper end of the five-year range but below the extremes seen in August 2020. Physical premia in Shanghai and Dubai remain elevated.

The rally has lifted equities of major producers. The NYSE Arca Gold Miners Index is up 42% year-to-date, more than double the return on bullion itself, as investors apply operating leverage to the higher price environment.