Throughout 2024, the National Bank of Poland (NBP) purchased close to 90 tons of gold, moving closer to achieving its goal of gold making up 20% of the country’s reserve assets. The People’s Bank of China also resumed regular purchases, adding 10 tons to its reserves in December.
Gold started last week at approximately $2630 per ounce and then steadily climbed higher, initially driven by weaker-than-expected private sector employment data. On the following Friday, after the publication of further indicators, the price of gold soared to $2700 USD/oz.
This was a somewhat unexpected reaction to the U.S. Department of Labor’s report, which showed that non-farm employment in December 2024 increased by 256,000 jobs, far exceeding the Reuters forecast consensus of 160,000 and the revised number of 227,000 from November.
The rise in gold prices was contrary to many traders’ expectations given the strong employment data. This increase has elevated the probability (now at 97.3%) that the Federal Reserve will not cut interest rates in January, and the chances that the Fed will maintain current rates at the FOMC meeting in March are estimated at 77.9%.
According to the latest report from the World Gold Council, December 2024 was a disappointing month for the gold market, with prices falling by 1.6%, a significant departure from analysts’ expectations. The drop was driven by a strong rally in the U.S. dollar index, effectively reducing demand for gold and enhancing the attractiveness of other assets.
Nevertheless, January 2025 has brought a new wave of uncertainty in the bond markets, which may increase investor interest in gold as a safe haven. Upcoming administrative changes in the United States and concerns about the debt ceiling are building tension that could also lead to a rise in gold prices in the first quarter of the current year.
The National Bank of Poland is set to make history as one of the key players in the gold market for the past year. In 2024, the central bank bought close to 90 tons of gold, boosting our gold reserves to 448.2 tons. This puts Poland on par with powerhouses like the European Central Bank, which currently holds 506.5 tons. We must wait until January 21st for official confirmation of these figures from the NBP.
It’s worth noting that, according to the plans of the National Bank of Poland, gold is intended to ultimately make up 20% of our country’s total foreign reserves. Currently, this figure stands at 16.86%, suggesting that in the coming years we can expect further significant purchases. The role of gold in Polish reserves is particularly important in the context of building the country’s financial stability.
Analysts agree that the NBP’s decisions to allocate funds to gold are part of a global trend to strengthen reserve assets that are resistant to market volatility. Moreover, Poland’s policy of storing gold in domestic vaults and in international locations such as London and New York underscores a strategic approach to managing this resource.
Gold remains a key asset in reserves
For several years, the NBP has consistently increased its gold reserves. Between 2023 and 2024, the central bank acquired almost 220 tons of gold, making Poland one of the most active players on the global market. These decisions not only support the financial stability of the country but also strengthen its position in the international monetary system.
Gold has long played a crucial role in securing Poland’s currency reserves. After years of marginalizing this asset, the last decade has seen a return to its importance as a strategic resource. The NBP’s current actions continue the tradition of strengthening Poland’s position in the global economy by building reserves that are resistant to market fluctuations.
The prestige aspect cannot be overlooked: Poland, ranking 12th globally in terms of gold reserves (according to World Gold Council data at the end of the third quarter of 2024), serves as an example for other Central and Eastern European countries. Increasing gold resources builds the country’s financial credibility and enhances its resilience to global economic crises.
In China, demand for gold is growing
China, as the world’s largest consumer of gold, continues its intensive purchases of the metal. In December, the People’s Bank of China acquired an additional 10 tons of gold, raising its reserves to an impressive level of 2280 tons. Over the course of 2024, the central bank’s reserves increased by a total of 44 tons. Commerzbank analysts believe the PBoC will continue buying and highlight several key trends in China:
Reserve Diversification: Gold purchases are part of a long-term strategy to reduce dependency on the U.S. dollar, diversify reserves, and strengthen the position of the yuan in international markets. Currently, the precious metal constitutes 5% of the Middle Kingdom’s reserves.
Increased Consumer Demand: The approaching Chinese New Year traditionally boosts demand for gold jewelry and bars. Additionally, in the context of deflation and diminishing returns on Chinese bonds, consumers are increasingly investing in physical gold.
The gold market in 2025 faces many challenges and opportunities. Price consolidation in the first quarter seems likely, but growing uncertainty in financial markets and demand from central banks and consumers in Asia may support gold prices in the long term.
Will gold maintain its position as a safe haven in times of global uncertainty? The year 2025 will undoubtedly provide an answer to this question.
Michał Tekliński, gold market expert at Goldsaver.pl, Goldenmark Group