Global Central Bank Gold Purchases Hit Record, Providing Long-Term Support for Gold Prices

On July 31, 2026, the World Gold Council's latest Global Gold Demand Trends Report showed that central bank gold purchases in Q2 surged 45% year-on-year, reaching the highest level for that period in history. This news injected a strong boost into the recently volatile gold market, with international gold prices quickly rebounding above $3,950 per ounce, up 1.2% on the day. Silver prices also strengthened, moving above the $30 per ounce level.

Central Bank Gold Buying Spree: From Safe Haven to Strategic Allocation

The report noted that net central bank gold purchases reached 326 tons in Q2, marking the fifth consecutive quarter above 300 tons. Among them, emerging market central banks were the main buyers, with China, India, Turkey, and Poland standing out. The People's Bank of China has increased gold reserves for nine consecutive months, with official reserves surpassing 2,450 tons; the Reserve Bank of India added 36 tons in Q2, a record high for a single quarter; and the Central Bank of Turkey converted gold through domestic commercial banks, raising reserves to 690 tons.

Notably, the European Central Bank, previously viewed as a net seller of gold, also showed rare positive buying. In an interview, the Governor of the National Bank of Poland stated: "In the current international monetary system and geopolitical environment, gold is the only truly neutral reserve asset." This statement reflects a strategic decline in global central banks' reliance on US dollar reserves.

De-dollarization and Revaluation of Safe Assets

Behind this wave of central bank gold buying is the acceleration of de-dollarization. As the US weaponizes the dollar payment system and US Treasury debt surpasses $40 trillion, central banks are diversifying their reserve structures. Gold, as an asset with no sovereign credit risk, naturally fits this need.

• Gold's share of global official reserves has risen to 14.3%, up significantly from 8.8% in 2020.
• According to the International Monetary Fund (IMF), the US dollar's share of global foreign exchange reserves has fallen to 56.2%, the lowest since 1995.
• The proportion of global central banks planning to continue increasing gold holdings within the next 12 months reached 62%, a record high.

Tightening Supply-Demand Balance Provides Fundamental Support for Gold Prices

The sustained growth in central bank gold purchases is profoundly reshaping the gold market's supply-demand balance. In the first half of 2026, total global gold supply was 2,350 tons, while central bank purchases plus investment demand totaled 1,500 tons, accounting for 64% of total demand. This structural supply shortfall has built a solid bottom for gold prices.

Market analysts at the World Gold Council noted: "Central bank gold buying is no longer a cyclical adjustment but a long-term structural trend. Even during the deep correction in gold prices in the first half of the year, central banks continued buying at an average pace of 5.6 tons per day. This contrarian 'buying the dip' approach sends a strong confidence signal to the market."

Shift in Investor Behavior: From Speculation to Allocation

Notably, central bank gold buying is shaping the behavior of ordinary investors. In the past, retail investors tended to view gold as a speculative tool, but in recent years, more wealth management institutions and pension funds have increased their gold allocation. A recent Citi report recommends that investors raise gold allocation to 15%-20% against the backdrop of weakening dollar credit.

Precious metals analyst Wang Hua said: "Central bank gold buying is the most reliable 'floor' for gold prices. It has changed the previous pattern where gold prices were highly dependent on US real interest rates and the dollar index. In the future, even if the Fed maintains high interest rates, the downside for gold prices will be very limited." In fact, over the past year, the negative correlation between gold prices and 10-year US Treasury real yields has fallen from 0.82 to 0.53, showing the growing dominance of central bank demand over prices.

Silver Prices Benefit: Gold-Silver Ratio Rebalancing Begins

The central bank gold buying spree has also indirectly supported silver prices. As gold's "shadow asset," silver, driven indirectly by central bank buying and boosted by surging industrial demand from the photovoltaic sector, saw the gold-silver ratio fall from 95:1 at the start of the year to around 90:1.

Analysts point out that if the central bank gold buying trend continues, gold will keep strengthening, and with silver industrial demand growth outpacing supply growth, silver is likely to show greater price elasticity in the second half of 2026, with the gold-silver ratio potentially reverting further toward the long-term average of 80:1.

Gold Price Outlook and Risk Factors

Looking ahead to the second half of 2026, global central bank gold purchases are expected to maintain double-digit growth. Heightened geopolitical risks, rising global debt levels, and the lack of fiscal discipline after the US election will all reinforce gold's safe-haven value. Several international investment banks have raised their gold price forecasts, with Goldman Sachs expecting gold to reach $4,200 by year-end and UBS setting a conservative target of $4,000.

However, investors should also be wary of short-term risks. If the Fed unexpectedly turns extremely hawkish or a global liquidity crisis erupts, gold prices could experience sharp volatility. But from a medium-to-long-term perspective, the structural force of central bank gold buying provides an unprecedented margin of safety for gold investment.

The revival of gold in central bank reserves is not just a change in asset allocation but also a microcosm of the reshaping of the global monetary system. For ordinary investors, following the central banks' footsteps may be the best strategy to navigate economic cycles.

As August approaches, the market will focus on the Jackson Hole global central bank symposium in mid-August, where the Fed chair's language could trigger a new round of gold price volatility. But in any case, the sustained buying from central banks will ultimately be the most solid backing for gold prices.