Central Banks Bet Big on Gold Amid Dollar's Wartime-Style Tail Risk

Central banks have been buying gold at an unprecedented rate this year, even as its price has fallen by 22% between January and September. The European Central Bank announced in June that gold had surpassed US Treasuries as the world's largest reserve asset.

In the second quarter alone, central banks purchased 289 tonnes of gold, a record for that period and five times the pace of Q1. Poland's central bank openly stated that it was 'buying the dip', indicating that they were adding to their reserves despite the price drop.

Gold peaked at $5,589 an ounce on January 28th, but its price fell to $4,330 by September. Despite this decline, central banks continued to buy gold, with Poland alone adding 82 tonnes towards its target of 700 tonnes.