Central banks bought 850.1 tonnes of gold last year. That is well below the 2022 record of 1,082 tonnes, but still more than double the roughly 400 tonnes per year that was normal back in the 2000s. China, India, Poland, Turkey, the Czech Republic and about 20 other central banks kept adding to their vaults, showing this is not a one country story but a broad shift in how governments manage their reserves.

This matters because central banks are not day traders. When a government buys gold, it usually plans to hold it for decades, not months, so this demand tends to sit quietly on the sideline of the market and rarely gets sold back. Even at a slower pace than 2022, buying at these levels acts like a steady floor under gold prices, absorbing supply that might otherwise weigh on the market.

The dollar's share of global allocated reserves now sits around 58%, down from 73% in 2000 and 66% in 2015. That is a slow, steady decline that turned sharper after February 2022, when Russia's dollar assets were frozen as part of Western sanctions. That single event sent a clear message to governments everywhere: dollar holdings can be cut off by political decisions, not just market forces.

Think of it like a company realizing it depends too much on one customer and starting to look for others. As countries diversify away from the dollar, gold is one of the main places that money goes, because it is nobody's liability and cannot be frozen by another government. Every percentage point the dollar loses in global reserves tends to translate into more structural demand for gold over time.

The Caldara-Iacoviello Geopolitical Risk Index, which tracks how often and how intensely newspapers report on war and international conflict, currently reads 173.6. That is well above the baseline of around 100 and squarely in the elevated zone that starts at 150, though still far from the crisis threshold of 300. The war in Ukraine, ongoing conflict in the Middle East, and rising US-China tension over Taiwan are the three main stories keeping this number high.

Gold has long served as a kind of insurance policy against a world that feels less predictable. When headlines turn worrying, investors and even governments tend to want an asset that does not depend on any single country's promises or any bank's solvency. An index stuck in elevated territory for an extended stretch, rather than spiking briefly and fading, tells us this is less a headline scare and more a durable backdrop that keeps a bid under gold.

Global gold mine output sits at 3,814.6 tonnes per year, a figure that has barely moved since 2018 despite gold prices climbing sharply over that same period. Normally, higher prices encourage miners to dig up more, but that has not happened here. New large deposits are increasingly hard to find, and rising energy costs along with slow permitting processes are making it harder to open new mines or expand existing ones.

Think of gold supply like a farm that cannot plant more fields no matter how high the price of wheat goes, because the land simply is not there or the paperwork takes years to clear. This matters because it means that when demand for gold jumps, whether from central banks, investors, or jewelry buyers, miners cannot simply ramp up production to meet it. That inflexibility on the supply side is a quiet but persistent force that supports prices whenever demand picks up.