The hot topic at the IMF meetings is the price of gold. Could it help put a lid on prices?

By Greg Robb

The record price of gold is the 'topic du jour' among the finance elite

Gold prices keep refreshing record highs.

As global central bankers, finance ministers and private-sector bankers gather in Washington this week for the annual meetings of the International Monetary Fund and the World Bank, the price of gold is the "topic du jour," as one participant put it.

And the hot-button discourse may actually help put a ceiling on the skyrocketing price of the yellow metal, according to Robin Brooks, a senior fellow in the global economy and development program at the Brookings Institution think tank.

Brooks noted that the focus among participants on one particular topic -the outlook for gold - reminds him of 2023, which coincided with the 10-year U.S. Treasury yield BX:TMUBMUSD10Y rising near 5%, its highest level since 2007.

That year, most people came away from the meetings deeply skeptical of the rise in long-term bonds, and that collective judgement ended up playing out in markets. The 10-year yield fell for the remainder of 2023 and "has not dared rise back up to 5% ever since," Brooks said in a note on Substack.

On Thursday, gold (GC00) surged to a fresh record high of over $4,300 an ounce, continuing its record-breaking rally this year.

On the sidelines of the IMF and World Bank meetings, market experts have been debating whether to buy or short gold. They are wondering if the rise in the price of gold is another sign of froth in the markets, or more of a fundamental market move.

Macroeconomists are worried that if the gold rally is a sign of a bubble, it could burst - with dangerous ramification for the global economy.

The U.S. economy has been bolstered this year by spending from higher-income households. If gold, bitcoin (BTCUSD) and equity SPX prices start to decline, this spending would likely dry up.

Central bankers view gold's move as a sign of political concerns.

"Every time you doubt governments, you go to gold," said Axel Weber, the former chief of Germany's central bank, in an interview with MarketWatch.

Former St. Louis Fed President James Bullard said the run-up in gold is "a little worrisome from an inflation perspective," because it suggest people don't think the Federal Reserve is reliable or able to tamp inflation down.

Tobias Adrian, the head of the IMF division that tracks markets, agreed the rise in gold prices is a proxy for investors dealing with uncertainty.

"Clearly, there is a lot of uncertainty. This may come down at some point, but metrics of policy uncertainty continue to be elevated by historical standards," Adrian said in an interview.

Central-bank purchases of gold have been trending higher, but there hasn't been a major change in their pace, Adrian noted. He said the rise in the price of gold is due to investors adding to their holdings, rather than a paradigm shift.

Asked by a CNBC reporter what's behind the rise in gold, U.S. Treasury Secretary Scott Bessent replied that "there are more buyers than sellers."

He dismissed suggestions that it represents a shift away from the U.S. dollar DXY as the global reserve currency.

"I don't know why everyone comes back to the dollar," Bessent said, observing that the dollar is down because the 10-year Treasury yield has fallen this year.

Brian Bethune, an economist at Boston College, said the price of gold is impacted by supply, not just sentiment - and in the short-term, there may not be sellers.

In that vein, analysts at the Center for Economic and Policy Research, a left-leaning think tank, believe the IMF should sell a portion of its large gold reserves to generate funds for foreign aid.

-Greg Robb

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

10-16-25 1541ET