Central Bank Gold Demand Continues

Central Bank Gold Demand Continues

Despite some selling that materialized in March after the start of the U.S. war with Iran, global central bank gold demand continued at a torrid pace in the first half of 2026, and this desire for physical metal underpins and supports the derivative-based gold price.

Yes, it has been a difficult few months for gold investors. The U.S. war with Iran has created an atmosphere of potential rate hikes and positive real interest rates. Traders of gold futures have responded by liquidating positions, and the gold price has fallen. As a result, as I type this on July 20, the gold price is down about 7% year-to-date. Follow the latest movements with the gold spot price chart.

Central Bank Gold Demand Supports Gold Prices

And the gold price would be down substantially more if the central bank gold sales that occurred in March would have persisted. It has been reported that Turkey liquidated as much as 80 metric tonnes of their stockpile in March as they sought to defend their lira. Russia has been a consistent seller too. Thankfully, however, the pace of central bank selling has slowed in the past 90 days.

This means that the net total of central bank demand is once again positive and many of the big buyers are buying the dip in price. In fact, the People's Bank of China has dramatically increased their gold demand in 2026. After grabbing just 27 metric tonnes in all of 2025, total PBOC gold purchases have totaled 40 metric tonnes for just the first half of 2026!

China's Gold Buying Continues To Accelerate

Focusing specifically on China, Goldman Sachs reports that the official holdings increase of 15 metric tonnes is not even a third of total Chinese demand in the month of June. See below:

And these underestimated "official" gold purchases are not simply related to China. The World Gold Council reports that total gold demand might be underreported by a factor of 15! Track precious metals using the live spot price charts.

And let's not forget about the gold demand from Tether. The hard asset purchases from this stablecoin have increased dramatically in recent years too.

Physical Gold Demand Vs. Futures Market

So why do I remind you of all this today? Because there is now a prevailing sentiment that somehow the gold price is set to fall another 50% and make a downward move to $2000/ounce. Maybe the chart-readers and wave-counters truly believe this? But how does the derivative/futures price get cut in half if actual physical continues to increase as price falls? Again, the chart below shows just official Chinese demand, but you get the idea...

Gold Price Outlook For 2026

In summary, the gold price has absorbed some unexpected body blows in the first half of 2026. However, the global impact of the Iran War has yet to be felt. Once the Fed begins to loosen monetary policy in response to fiscal and economic concerns, the reversal of the prevailing futures trade will follow. Couple that with continued global central bank physical gold demand and you have the recipe for a renewed bull market and new all-time highs in price in the months to come.

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