Central bank gold buying frenzy sets new record
The World Gold Council's Gold Demand Trends Report released on July 25, 2026 shows that global central banks' net gold purchases in H1 2026 reached 483 tons, up 12% year-on-year, the highest first-half total since records began in 2000. Q2 alone saw 246 tons of purchases, also a quarterly record. This data quickly became the focus of the gold market. As of the Asian session on July 27, international gold prices were fluctuating around $4,950 per ounce, up about 18% from the beginning of the year.
Emerging market central banks are main buyers
By region, emerging market central banks remain the main buyers. The People's Bank of China added 102 tons of gold in H1, bringing total reserves to 2,478 tons, raising the share of gold in foreign exchange reserves to 4.8%. The Reserve Bank of India followed with 89 tons, pushing its gold reserve share above 10% for the first time. Central banks in Poland, Turkey, Kazakhstan and others also continued large purchases. Notably, some oil-exporting central banks in the Middle East began converting petrodollar surpluses into gold assets. Saudi Arabia purchased 53 tons in H1, and the UAE purchased 27 tons. These countries, long dependent on dollar-denominated assets, have recently turned to gold to diversify reserves amid geopolitical risks and dollar credit concerns.
Motives: de-dollarization and asset safety
Several central bank officials have publicly stated that the main purpose of increasing gold holdings is to optimize reserve structures and reduce reliance on a single currency. The latest IMF data shows that the dollar's share in global central bank foreign exchange reserves has fallen to 57.4%, the lowest since 1995. Gold, as a physical asset with no sovereign credit risk, is favored in an environment of heightened sanctions risk. A European Central Bank research director noted in an interview: "When more than two-thirds of global trade is settled in non-dollar currencies, central banks naturally need more non-dollar reserves. Gold provides a natural hedge." Additionally, the global interest rate trend is downward—after the Fed cut rates by 25 basis points in June, real interest rates fell further, reducing the opportunity cost of holding gold.
Structural support effect on gold prices
Unlike retail investors who are often driven by sentiment, central bank gold buying is long-term, stable and non-speculative. Wang Qiang, precious metals analyst at Industrial Bank, believes that the sustained buying of hundreds of tons per year by central banks provides a solid floor for gold prices, making it difficult for prices to fall even when speculative funds exit. In H1, although ETFs saw a net outflow of about 34 tons, combined demand from central banks and gold bars/coins totaled a net 587 tons of purchases, fully offsetting the ETF outflow. Citibank raised its full-year 2026 gold price forecast to $5,200 per ounce in its latest report, with the core logic being the resonance of central bank buying and the rate cut cycle. The report emphasizes that if the Chinese and Indian central banks maintain the current pace of purchases in H2, the gold price could hit $5,500 by year-end.
Gold market bellwether: long-term logic unchanged
Looking ahead to H2, the global central bank gold buying frenzy is unlikely to cool. On one hand, during the 7th BRICS Summit in 2025, several central banks jointly stated they would generally raise the gold reserve share to over 15% within five years. On the other hand, policy uncertainty from the U.S. election and recurring geopolitical conflicts sustain gold's safe-haven appeal. The CME FedWatch tool shows the market prices a 68% probability of another Fed rate cut in September, and gold ETF holdings have begun to recover recently. The gold market bellwether is clear: driven by sovereign central bank buying and monetary easing, gold is in a transition phase from a 'slow bull' to 'acceleration'. Investors need to closely monitor the reserve change data released by central banks in the latter part of each month, as well as the wording changes in Fed rate decisions, as these will be key to judging the short-term rhythm of gold prices.
(Source: Vietnam Raw Materials Information Network)
