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How Central Banks Could Help Drive the New Gold Rally

BY | ETF Database
7:39 am ET 09/02/26 | 5 VIEWS
Given that gold has found itself back on the menu for many advisors and investors, it is worth exploring the factors driving the metal’s recent rally. Yes, behavioral trends and retail demand are fueling part of the surge, but there are also structural drivers that deserve equal attention.Key Takeaways: Gold’s new rally has renewed interest among advisors and investors. However, they aren’t the only ones driving demand for the precious metal. Central banks are buying up gold for its inherent defensive value during periods of inflation and geopolitical uncertainty. The Sprott Gold Miners ETF (SGDM B-), which offers straightforward access to large gold miners, saw strong NAV growth during August. Part of the momentum within the gold space is coming from central banks. Central banks have been increasing their gold reserves as of late and are likely poised to continue doing so in the coming months. While one can only speculate on the specific reasons central banks are broadly buying up gold, there are certainly strategic advantages to doing so. With inflation remaining a global issue, gold has historically served as a valuable inflationary hedge. Gold’s hedging prowess doesn’t stop there. When geopolitical shocks occur, the metal can also serve as a universally accepted source of value and payment among central banks across the world. Furthermore, gold tends to do well when the U.S. dollar declines, making it a useful defensive tool against currency risk. See More: Don’t Overlook Silver’s Potential Amid the New Gold RallyRiding the Gold Train With SGDMCrucially, central banks’ gold buying is more of a structural driver of demand. Even if some of it is due to short-term behavioral factors, central banks are primarily interested in gold so for its long-term merits. These structural drivers may give advisors and investors more confidence to invest in gold and gold miners right now. Moments like these also tend to work in favor of targeted strategies like the Sprott Gold Miners ETF (SGDM B-). Managed by Sprott, SGDM invests in larger gold companies listed on U.S. and Canadian exchanges. The fund’s index focuses on gold miners combining high revenue growth, compelling free cash flow yield, and low long-term debt to equity. SGDM has seen significant momentum as a result of the new gold rally, with its NAV surging 32.72% over the month ending August 31, 2026.For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Content Hub. An investor should consider the investment objectives, risks, charges, and expenses carefully before investing. To obtain a Prospectus, which contains this and other information, contact your financial professional or call 888.622.1813. Read the Prospectus carefully before investing, which can also be found by clicking one of the links below. Past performance is no guarantee of future results. One cannot invest directly in an index. A bull market is one in prices are rising and investor sentiment is generally positive. Funds that emphasize investments in small/mid-cap companies will generally experience greater price volatility. Diversification does not eliminate the risk of investment losses. ETFs are considered to have continuous liquidity because they allow an individual to trade throughout the day. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses, affect the Fund’s performance. Sprott Asset Management USA, Inc. is the Investment Adviser to the ETFs. ALPS Distributors, Inc. is the Distributor for the ETFs and is a registered broker-dealer and FINRA Member. ALPS Distributors, Inc. is not affiliated with Sprott Asset Management USA, Inc. or VettaFi. Exchange Traded Funds (ETFs): SETM, LITP, URNM, URNJ, COPP, COPJ, NIKL, SGDM, SGDJ, SLVR, GBUG, METL and REXC Physical Bullion Funds: PHYS, PSLV, CEF, and SPPP. Gold and precious metals are referred to with terms of art like store of value, safe haven and safe asset. These terms should not be construed to guarantee any form of investment safety. While “safe” assets like gold, Treasuries, money market funds and cash generally do not carry a high risk of loss relative to other asset classes, any asset may lose value, which may involve the complete loss of invested principal.

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