Insights 
VT 
Central bank purchasing of gold has notably slowed, despite rising gold prices boosting the percentage of reserves held in gold. The focus on dedollarisation persists in market analyses but hasn’t majorly influenced buying trends recently.
Analysis indicates that BRICs+ countries’ buying activities have paused, with Eastern European nations now driving central bank inflows, suggesting motivations beyond dedollarisation. CTA selling related to volatility control may have peaked, but significant future purchasing is not anticipated at any price.
The Debasement Trade
The debasement trade has attracted substantial fund flows from macro funds and retail participants, but the risk/reward ratio is currently unfavourable, with potential changes driven by forthcoming Supreme Court hearings. Leveraged positions remain affected by government shutdowns, complicating the analysis of outflow extent.
Current positioning data, derived from proprietary models and ETFs, indicates limited liquidations thus far. Despite keen interest in purchasing perceived dips, the market suggests this may not yet represent a viable buying opportunity.
As we see it, a major pillar of support for gold is weakening, which suggests caution for derivatives traders. Central bank buying has cooled significantly, with the World Gold Council’s Q3 2025 report showing net purchases falling to just 90 tonnes, a steep drop from the quarterly average of over 200 tonnes we saw throughout 2024. The high price of gold itself has inflated the value of existing reserves, reducing the urgency for central banks to acquire more physical volume.
Dedollarization Narrative
The popular dedollarization narrative that drove prices higher earlier this year appears to be on hold for now. We’ve noted that gold buying from major BRICs+ nations like China has been flat for four consecutive months, while smaller-scale purchases from countries like Poland seem more related to regional diversification. This shift means a key macro story supporting long gold positions has lost its momentum heading into the end of the year.
While heavy selling from systematic funds has likely peaked, we don’t see a catalyst for them to start buying aggressively again. The trade betting against the US dollar looks increasingly risky, especially with the upcoming Supreme Court hearings on the federal debt ceiling, which could bring unexpected dollar strength. In fact, major gold ETFs like GLD saw net outflows of over $1.5 billion in October 2025, showing that investors are already reducing their exposure.
Positioning data is somewhat murky after the brief government shutdown in early October 2025 delayed key reports, but our models show that many leveraged funds are still holding long positions. After peaking above $2,550 an ounce in August, gold’s slide to the current $2,420 level has many looking to buy the dip. However, with significant long positions yet to be liquidated, this dip may not be the one worth buying just yet.
