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Gold's support from central banks secures its leading role as an inflation hedge in 2025

Gold's support from central banks secures its leading role as an inflation hedge in 2025

Bitget-RWA2025/09/25 18:44
By:Coin World

- Gold outperforms Bitcoin as 2025's top inflation hedge amid macroeconomic risks, hitting record highs as central banks accelerate purchases. - Central banks added 166 tons of gold in Q2 2023, driven by de-dollarization efforts and its role as a physical asset with no counterparty risk. - Academic studies confirm gold's superior safe-haven status during market stress, contrasting Bitcoin's volatility and bond market correlations. - SPDR Gold Trust (GLD) rose 40% YTD in 2025 vs. Bitcoin's 19%, with analyst

In 2025, gold has firmly established itself as the top choice for protecting against inflation, surpassing

as investors navigate economic instability and shifting central bank policies. With stagflation concerns mounting—evidenced by weak economic indicators, elevated unemployment, and U.S. inflation approaching 3%—market participants are increasingly favoring traditional safe havens like gold, which has reached unprecedented highs, while Bitcoin continues to grapple with price swings. The U.S. dollar index hitting a 52-week low signals growing inflation expectations, and gold’s negative correlation with the dollar further cements its reputation as a refuge asset. In contrast, Bitcoin’s trajectory remains inconsistent, struggling to surpass the $115,000 mark despite its reputation as "digital gold" Gold, Bitcoin, and Bonds: Inflation Hedges for 2025 and Beyond [ 1 ].

Gold at Record Highs: Axel Merk on the $2.9B Bet Behind the Boom

Central banks have ramped up their gold acquisitions, purchasing 166 tons in the second quarter of 2023 alone, signaling a deliberate move to diversify reserves away from U.S. dollar holdings. Countries such as China, India, and Russia are at the forefront, motivated by de-dollarization strategies and preparations for possible changes in the global monetary system. According to the World Gold Council, 2022 marked the largest annual gold buying by central banks in over five decades, with this momentum carrying into 2023. This trend underscores gold’s distinctive strengths: shielding against currency depreciation and geopolitical turmoil, and serving as a tangible asset free from counterparty risk—an important edge over digital assets Why Central Banks Are Rapidly Buying Gold in 2025 [ 2 ].

The argument for Bitcoin as an inflation hedge remains debated. Its capped supply and decentralized framework attract some investors, but its price instability undermines its dependability. During the inflation surge of 2022, gold’s value climbed while Bitcoin plunged more than 70% from its peak. In 2025, Bitcoin has risen 16.46%, whereas gold has soared by 30%, highlighting their different behaviors: gold tends to excel during stock market stress, while Bitcoin’s movements are more closely tied to bond market shifts. Analysts such as André Dragosch from Bitwise maintain that gold is a more effective shield during equity downturns, while Bitcoin may offer protection during bond market disruptions, especially when yields rise and fiscal uncertainty grows Gold vs Bitcoin: Which is the Better Hedge? [ 5 ].

Research from academic and institutional sources further emphasizes gold’s superiority. A multifractal cross-correlation analysis revealed that gold outperforms Bitcoin as a safe haven during severe market shocks, though both assets have limitations under complex market conditions. Julius Baer points out that gold’s proven track record during equity corrections and its effectiveness against "bad inflation"—stemming from fiscal mismanagement—make it a more trustworthy long-term safeguard. Conversely, Bitcoin’s tendency to rise with riskier assets, especially during stock sell-offs, restricts its usefulness in conventional hedging strategies.

Market trends reinforce these observations.

(GLD) has climbed more than 40% so far in 2025, while Bitcoin’s 19% increase trails behind. Ongoing central bank demand for gold provides steady price support, and some analysts forecast that gold could exceed $4,000 per ounce if inflation endures. Bitcoin’s prospects, however, are closely tied to broader economic signals: should the Federal Reserve adopt a more accommodative stance, Bitcoin could approach $135,000 by early 2026, though careful risk management remains essential Gold, Bitcoin, and Bonds: Inflation Hedges for 2025 and Beyond [ 1 ].

The takeaway for investors is straightforward: spreading investments across both assets may enhance risk-adjusted returns. Gold’s stability as a store of value and Bitcoin’s potential in bond-driven scenarios suggest they can play complementary roles in diversified portfolios. As central banks continue to favor gold for monetary independence and systemic stability, its status as the leading inflation hedge looks set to persist through 2025 and beyond.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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