Market expectations of a potential Federal Reserve rate hike are limiting the upside potential for gold prices, despite significant purchases by global central banks. The European Central Bank reported that by the end of 2025, gold's share of global official reserve assets is expected to rise to 27%, surpassing US Treasury bonds by 5 percentage points. This shift marks gold as the largest single asset class in global official reserves. Since 2022, central banks have been purchasing gold at unprecedented levels, with net purchases exceeding 1,000 tons annually from 2022 to 2024, and reaching 863 tons in 2025. However, recent fluctuations in gold prices are attributed to accumulated downward pressure from previous price surges and inflation expectations driven by geopolitical tensions in the Middle East. These factors, coupled with anticipated Fed rate hikes, have created a unique scenario where central banks continue to buy gold, yet prices remain subdued in the short term.