Central Banks Bought a Record 289 Tonnes of Gold - Why the Rush Won’t Stop!?

Something unusual happened in the second quarter of 2026. As gold posted its steepest quarterly price decline in a decade, the world’s central banks bought more of it than in any second quarter on record.

According to the World Gold Council’s latest Gold Demand Trends report, net central bank purchases reached 289 tonnes between April and June — a 74 per cent increase on the same period a year earlier and a more than fivefold jump from Q1’s revised total of 57 tonnes. For institutions whose mandates demand prudence above all else, buying aggressively into falling prices is not impulse behaviour. It is a signal.

The buyers and the logic behind them

The National Bank of Poland led the charge, adding 51 tonnes to lift its reserves to 632 tonnes by the end of June. The People’s Bank of China followed with 33 tonnes — its largest quarterly purchase since late 2023 — bringing its holdings to 2,346 tonnes. Uzbekistan (16 tonnes), Kazakhstan (15 tonnes), Jordan (six tonnes) and the Czech Republic (six tonnes) all contributed meaningfully.

Russia, notably, was a net seller, offloading 22 tonnes to cover budget shortfalls. Even so, the buy-side appetite remained formidable. The headline 289 tonnes actually understates institutional demand. The WGC reclassified a large portion of Q1’s originally reported 244 tonnes as over-the-counter transactions — a category that includes sovereign wealth funds and government entities which do not report publicly. OTC buying surged to 327 tonnes in Q2 alone, suggesting the true scale of state-affiliated gold accumulation is considerably larger than the official figure implies.

Reserve managers do not trade gold the way hedge funds do. For a central bank, gold is not a speculative position — it is a structural reserve asset. When prices fall, the strategic case for accumulation does not reverse. If anything, a lower price makes adding to a long-term holding more attractive. You are buying at a reduced cost into an asset you intend to hold for decades.

The structural drivers: geopolitics, de-dollarisation and trust

The WGC’s 2026 Central Bank Gold Reserves Survey — covering 76 reserve managers, the highest participation in the survey’s nine-year history — provides the clearest window into institutional thinking. Eighty-nine per cent expect global central bank gold holdings to rise over the next twelve months. Forty-five per cent plan to increase their own institution’s reserves. Perhaps most tellingly, 74 per cent expect the US dollar’s share of global reserves to fall over the next five years.

That last figure is the mechanism driving the shift. Central banks are systematically rotating out of dollar-denominated assets and into gold. The dollar’s share of global foreign exchange reserves has already declined steadily for years, with recent data putting it at approximately 57 per cent. Gold’s share has risen correspondingly.

The reasons are not difficult to identify. Geopolitical fragmentation has made reliance on a single reserve currency feel increasingly precarious for nations outside the Western alliance structure. The expansion of BRICS, US-imposed financial sanctions on Russia, and ongoing tensions in the Middle East — including the US-Iran conflict that erupted in February 2026 — have all reinforced the view that reserve diversification is not optional but essential.

Gold, uniquely, is no one’s liability. It cannot be frozen by executive order, devalued by a printing press, or weaponised through the SWIFT network. In a multipolar world where trust between blocs is eroding, that neutrality has become its most valued characteristic.

What the price action tells us

Gold reached several all-time highs before the US-Iran conflict and rallied sharply when war broke out on 28 February. Since that spike, however, the metal has lost nearly 23 per cent of its value. Higher energy prices have driven up inflation and, in some markets, raised expectations of tighter monetary policy — headwinds for non-yielding assets. The price currently sits around $4,080 per ounce, with HSBC cutting its average 2026 forecast to $4,560.

Yet the World Gold Council describes central bank sentiment towards gold as “exceptionally strong.” Total gold demand for the first half of 2026 reached 2,522 tonnes, up 2 per cent year-on-year, with a record dollar value of $380 billion. Even as prices corrected, the total value of gold demanded globally hit levels never before recorded.

The split within the demand picture is revealing. Gold ETFs saw 45 tonnes of net outflows as speculative investors sold into weakness. Physical bar and coin demand held comparatively firm at 307 tonnes. Central banks, meanwhile, were the decisive buyers — and they were buying for structural reasons that have nothing to do with next quarter’s price chart.

Why the rush will not stop

The Q2 data is not an anomaly. It is a continuation of a multi-year trend that has accelerated rather than abated. The forces underpinning it — geopolitical risk, de-dollarisation, and the desire for reserve diversification — are structural, not cyclical. No diplomatic settlement in the Middle East, no rate decision from the Federal Reserve, and no quarterly earnings report is going to make those forces disappear.

With 89 per cent of surveyed reserve managers expecting further gold accumulation across the central banking system, and nearly three-quarters anticipating a continued decline in the dollar’s reserve share, the direction of travel is unambiguous. The question is not whether central banks will keep buying, but how quickly.

For investors, the lesson is straightforward. Central banks are the world’s most informed long-duration holders of financial assets. They manage reserves across decades, not quarters. When they buy into weakness at record scale, they are making a structural judgement about the monetary system — one that suggests the floor beneath gold demand is being rebuilt, quarter by quarter, regardless of what happens to the price in the short term.

The rush, in other words, is not a rush at all. It is a recalibration. And it is far from over.