Global central banks have once again begun accumulating gold.
According to the latest data from the World Gold Council, central banks globally made a net purchase of 17 tonnes of the precious metal in April. Prior to this, a report from the European Central Bank indicated that by the end of 2025, gold's share of global official reserve assets had historically climbed to 27%, surpassing U.S. Treasury bonds (22%) to become the largest component of global official reserves.
This year, gold prices have experienced significant volatility. After hitting a record high of $5,598.75 per ounce in January, prices underwent a sharp correction of approximately $1,000 following the outbreak of the U.S.-Iran war. Prices have been fluctuating around $4,500 per ounce over the past month.
With central banks re-entering the market as buyers, the question arises: what direction will gold prices take from here?
A Return to Net Purchases in April
In March, influenced by factors including significant sales from Turkey, global central banks recorded a net sale of nearly 30 tonnes. However, just one month later, data from the World Gold Council shows a net purchase of 17 tonnes in April.
"Global central banks officially resumed a net buying trend for gold in April, with a single-month increase of 17 tonnes," noted Marissa Salim, Head of Asia-Pacific Research at the World Gold Council. "This represents a very strong V-shaped rebound compared to the sizable net selling reported in March."
This shift is underpinned by the sustained enthusiasm for gold among emerging market central banks, with Eastern Europe and Asia being the primary drivers of purchases. Over the past 36 months, Eastern European central banks have averaged net monthly purchases of 12 tonnes, while Asian central banks have averaged 11 tonnes. The global average for central bank net purchases during the same period stands at 29 tonnes per month.
World Gold Council data shows that the National Bank of Poland led the pack with a net purchase of 14 tonnes in April, maintaining its position as the world's largest buyer. Its cumulative gold purchases for the year-to-date have reached 45 tonnes, with gold now representing 30% of its total reserves. The People's Bank of China continued its steady accumulation, increasing its holdings by approximately 8 tonnes (260,000 ounces) in April. This marks the 18th consecutive month of gold purchases by China, bringing its total gold reserves to about 2,322 tonnes by the end of April. According to the World Gold Council's monthly data on central bank purchases, this was the second-largest monthly purchase by the PBOC since it resumed buying in November 2024, surpassed only by the roughly 10 tonnes purchased in December 2024. The Czech National Bank also maintained its consistent approach, making a net purchase of 2 tonnes in April, its 38th consecutive month of increasing holdings.
Meanwhile, some countries chose to reduce their holdings. The Central Bank of Russia continued its selling operations with a net sale of 6 tonnes in April, marking its fourth consecutive month of net sales. Turkey, which had engaged in substantial sales earlier, saw its reserves stabilize in April after settling short-term swap contracts.
Gold Ascends to Top Spot in Global Official Reserves
In recent years, sustained active gold purchases by central banks worldwide, coupled with rising gold prices, have propelled gold past U.S. Treasury bonds to become the largest asset in global official reserves.
A report released by the European Central Bank on June 2 stated that by the end of 2025, gold's share of total global official reserve assets had increased to 27%, while the share of U.S. Treasury bonds had fallen to 22%.
"Persistent geopolitical tensions continue to fuel significant gold allocations by central banks," wrote ECB President Christine Lagarde in the report. The ECB noted that continued gold purchases by emerging economies such as China, Poland, Turkey, and India have reshaped the global reserve allocation structure. Combined with the substantial rise in gold prices, this has collectively increased gold's weighting in total reserve assets.
This shift in the landscape is the result of a long-term trend. Since the 2008 global financial crisis, central banks have transformed from net sellers to net buyers of gold, with cumulative net purchases exceeding 8,000 tonnes. Particularly after 2010, as emerging market economies grew and their foreign exchange reserves expanded, the need for diversified reserve allocation became increasingly urgent. Gold, as a reserve asset free from sovereign credit risk and possessing intrinsic value, has gained favor with more and more central banks.
However, this milestone surpassing of U.S. Treasuries is not solely determined by the volume of central bank purchases; it is the result of multiple converging factors.
Xia Yingying, Head of Precious Metals and New Energy Research at Nanhua Futures, analyzed that the rise in gold prices is a key factor. According to IMF data, since global central banks resumed net purchases in 2009, the market value of official gold reserves has increased from $850 billion at the end of 2008 to $5.074 trillion by the end of 2025, a rise of 473%. Of this increase, 370% was attributable to the rise in gold prices, while the volume of gold reserves grew by 22%. Over the same period, global central bank foreign exchange reserves increased by 83%.
Meanwhile, U.S. Treasury bonds have faced a double blow. On one hand, the previous Federal Reserve interest rate hike cycle led to higher bond yields, causing a decline in the market value of existing bonds. On the other hand, the U.S. national debt has surpassed $39 trillion, creating immense pressure for interest payments and diminishing the credit appeal of U.S. Treasuries. Additionally, geopolitical factors and de-dollarization trends have played a crucial role.
The European Central Bank also pointed out that compared to mainstream fiat currencies, gold has several limitations as an official reserve asset: its price is highly volatile, and it does not generate interest income. The storage and safekeeping costs for physical gold are also high. More critically, the supply of gold is relatively inelastic, making it difficult to adjust flexibly in response to changes in global international liquidity demand.
Outlook for the Gold Market
As mentioned, gold prices have been highly volatile this year. After reaching a historic peak of $5,598.75 per ounce in January, a correction of roughly $1,000 followed the outbreak of the U.S.-Iran war. Prices have been oscillating around $4,500 per ounce for the past month.
At the time of writing, spot gold was trading at $4,506.278 per ounce, up 1.64%. COMEX gold futures were at $4,535.4 per ounce, up 1.53%.
What lies ahead for the price of gold?
"Central bank gold purchases can help dampen price volatility, as they show a periodic negative correlation with gold prices," said Xia Yingying. "However, if the growth in purchase volume is driven by non-price factors such as an increased preference for gold allocation, it will weaken the market's ability to adjust supply in response to demand growth, thereby increasing the elasticity of price increases."
Xia Yingying believes that the rise and fall of gold prices are primarily driven by investment demand. In the second half of the year, key factors to watch include the impact of international crude oil prices and the AI economy on expectations for Federal Reserve monetary policy, as well as fluctuations in market risk aversion sentiment affecting investment demand.
Goldman Sachs maintains its bullish outlook on gold, predicting a resumption of the upward trend by the end of 2026. Analysts Lina Thomas and Daan Struyven stated in a report that the medium-term outlook for gold remains solid, with prices potentially reaching $5,400 per ounce due to continued central bank purchases and the expectation of two more U.S. interest rate cuts this year.
Strategists at Wells Fargo indicated that four out of five economic scenarios point to further currency depreciation, which could push gold prices to $8,000 per ounce by 2027. However, in a pessimistic scenario where currency depreciation momentum falls short of expectations, gold prices could drop to $4,000 per ounce by the end of 2027.
Natasha Kaneva, Global Head of Commodities Research at J.P. Morgan, recently stated in an interview that under a baseline scenario, if the Strait of Hormuz resumes normal passage in June, market expectations for the Federal Reserve's policy path could also change. "It is more likely that the Fed will hold steady. Once real interest rates decline, gold prices will rise because central banks will also resume their gold purchases," she predicted. She forecasts that gold could reach $6,000 per ounce by year-end and $6,300 per ounce by the end of 2027. However, if the strait fails to reopen, another scenario may emerge—"oil prices continue to rise, and gold continues to fall."
Conversely, several institutions including Morgan Stanley, ANZ Bank, and Citi have expressed a more bearish view on gold's trajectory, revising their price forecasts downward. For example, Morgan Stanley has lowered its gold price target for the second half of 2026 to $5,200 per ounce, significantly below its previous forecast of $5,700. The rationale cited is that geopolitical friction has led to higher real interest rates and a delayed Fed rate-cutting cycle, causing the classic negative correlation between gold and real interest rates to revert to its normal pattern.
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