Gold’s Roller Coaster: Who Is Buying?

Gold has been on a roller coaster

Gold took a path in the first half of this year that few expected. At the start of the year, markets were talking about a move towards 6,000. On January 29, spot gold reached a record high of $5,598, gaining almost 30% during the month. Five months later, on June 24, it fell below $4,000 to a low of $3,942, a 29% decline from the peak. June's monthly loss of 10.45% was the largest since 2008. Now, in August, gold has moved back above $4,640 and traded as high as $4,656 intraday.

Some investors chased the rally and others sold during the decline. But one group of buyers never stopped: central banks around the world.

Who has kept buying?

2022-2024: global central banks bought more than 1,000 tonnes each year.

2025: purchases totalled 863 tonnes.

2010-2021: annual purchases averaged only 473 tonnes.

2026: another 244 tonnes were bought in the first quarter.

They bought as prices rose and as prices fell. In particular, when gold dropped below $4,000 in June, other investors were cutting losses while central banks were buying.

Gold overtakes Treasuries for the first time

A historic milestone: at the end of 2025, gold accounted for 27% of global official reserves, overtaking US Treasuries at 22% for the first time and becoming the largest official reserve asset worldwide. Gold's position on central-bank balance sheets exceeded that of dollar assets, something that had never happened before.

Why do central banks keep buying? Three reasons

First, diversification away from the dollar: 74% of central banks expect the dollar's share of reserves to decline over the next five years. They are spreading their holdings across more baskets.

Second, crisis protection: 90% hold gold because of its performance during crises, a record proportion.

Third, a store of value and protection against inflation: 84% see gold as a long-term store of value. It pays no interest, but it is not vulnerable to money creation.

Central banks also buy in a distinctive way: quietly, without competing aggressively for supply. Large purchases would raise prices and their own acquisition costs, so many use anonymous over-the-counter channels. A few dozen tonnes each month may look modest, but over a year they can accumulate more than a thousand tonnes.

Private investors watch prices; central banks watch creditworthiness. When markets begin to question a currency's credibility, money looks for an asset that does not depend on any country's backing.

What should we watch next?

First, the September Fed meeting. Rate-hike expectations helped drive gold down to $3,942 in the first half, while fading expectations have brought it back above $4,600. Interest rates are the largest variable.

Second, monthly central-bank purchase figures: are they still buying?

Third, whether gold can hold above $4,500 and then move towards $4,700. Some market participants are already discussing $4,900.

Gold's anchor has shifted from risk aversion to sovereign creditworthiness. Central banks vote through their reserves; we follow the data.