Gold is trading at US$5,172/oz, up 18% since January and within reach of the record near $5,600 it hit before Kevin Warsh's Fed nomination triggered a sell-off in late January.
Most market commentary has attributed the rally to U.S. tariff uncertainty and dollar weakness, but the more significant drivers are structural - sovereign central banks buying at a pace and scale that has no modern precedent, and a mining industry that has not made a major discovery in more than two decades.
Poland leads sovereign buying
The National Bank of Poland bought 102t of gold in 2025 - more than China officially reported, more than India, more than any other central bank.
It now holds 550t at 28% of total reserves, up from 17% two years ago and more than the European Central Bank holds, and is targeting 700t total.
Governor Adam Glapinski has described gold as "the only safe investment for state reserves".
Management board member Sobon was direct on the bank's approach to price: "The price is not a primary consideration for us."
The bank's position reflects a broader shift among Eastern European central banks following the freezing of $300 billion in Russian dollar reserves by Western governments in 2022.
The Czech Republic has been buying for 21 consecutive months, and Hungary, Serbia and Romania are all adding to reserves.
China's reported figures are disputed
The PBoC officially reported adding 27t of gold in 2025, bringing total holdings to 2,306t at 8.5% of reserves.
Those figures are widely questioned by analysts and institutions that track physical gold flows.
Analyst Jan Nieuwenhuijs, whose methodology has since been adopted by Goldman Sachs, Bloomberg and the Financial Times, puts PBoC buying in Q3 2025 alone at 118t, up 55% year-on-year, with his estimated true Chinese monetary gold total at 5,411t - more than double the IMF-reported figure.
Goldman Sachs estimates China is reporting 10 to 11 times less than it is actually buying.
Physical flows support the higher estimates: standard 400-ounce London bars have been shipped to China during periods when Shanghai gold was trading at a discount to London, a trade no commercial buyer would execute at a loss.
The PBoC confirmed its 15th consecutive monthly purchase on February 7, buying through January's spike to near $5,600 and the subsequent fall to $4,400 without adjusting pace.
U.S. Treasury Secretary Scott Bessent raised the issue publicly at a February 5 congressional hearing, warning of "rumours of Chinese digital assets, possibly backed by gold" being developed to "build an alternative to American financial leadership."
China is also expanding its gold settlement infrastructure through Project mBridge, launched with the UAE's central bank in November 2025, which enables bilateral trade settlement in local currencies without using the dollar.
China's domestic mine output of roughly 380t annually is barred from export by customs law, meaning the world's largest gold producer withholds its own supply from global markets while purchasing additional metal from London.
Mine supply has plateaued
Global mine output has held at roughly 3,600-3,700t per year since 2016, and S&P Global projects a peak in 2026 followed by a decline.
Average new gold discoveries have dropped to 4.4Moz per year since 2020, from 7.7Moz a decade earlier, and the industry has not found a deposit above 50Moz since 2000.
The average mine takes 20.8 years to advance from discovery to first production, which means output over the next decade is largely determined by exploration work already completed.
Newmont, the world's largest gold miner, guided 2026 output at 5.26Moz, down from 5.9Moz in 2025, and reserve grades industry-wide have halved since 1990 to 1.28 g/t.
Price forecasts and market outlook
JPMorgan forecasts gold at $5,000/oz for Q4 2026, with $6,000 cited as a longer-term scenario.
Goldman Sachs has a year-end 2026 target of $5,400, and Wells Fargo is the most bullish of the major banks at $6,100-6,300.
The Reuters analyst consensus sits at $4,746, reflecting a view that exploration spending will eventually respond to elevated prices, though production timelines mean any supply response is years away.
When the U.S. Supreme Court struck down Trump's IEEPA tariffs on February 20, gold fell briefly before recovering above $5,000 within hours as the White House moved to alternative tariff powers.
Brookings Institution senior fellow Robin Brooks noted the dollar's underperformance as a safe-haven asset during the period, describing it as "concerning" and adding that the dollar is "not looking healthy."
Central bank gold demand has averaged more than 1,000t per year for the past three years, representing roughly 25% of annual mine production and a level of institutional buying the market had not seen since the early 1970s.
