During Monday's European trading session, spot gold prices edged higher, with the latest quote at $4,345.09 per ounce, up 0.30%. The session opened at $4,332.41, reached a high of $4,346.73, and touched a low of $4,313.16. The global trend of central bank gold accumulation continues unabated, with a major Asian economy initiating a 21-month consecutive buying streak. Despite gold prices retreating nearly 30% from their historical peak earlier this year, this nation has persisted with tactical gold asset allocation.
A number of central banks worldwide are simultaneously increasing their gold holdings. Institutional estimates suggest that the actual gold reserves of this major Asian economy may be higher than officially reported figures. Against the backdrop of currency internationalization, the country's future demand for gold allocation is expected to remain substantial, providing a solid foundation for gold prices to hold the key support level of $4,000 per ounce.
According to the latest foreign exchange reserve data, the major Asian economy's central bank purchased 20 tonnes of gold in July, marking the highest single-month accumulation since October 2023. The pace of central bank gold buying has accelerated notably since March of this year. Krishan Gopaul, Senior Analyst for Europe, the Middle East, and Africa at the World Gold Council, noted on social media that the central bank's net gold purchases total 60 tonnes year-to-date, bringing total gold reserves to 2,366 tonnes.
Beyond this major Asian economy, several other central banks are also increasing their gold reserves. Gopaul reported that the Czech National Bank added 1.7 tonnes of gold last month, moving closer to its 100-tonne reserve target. It has accumulated 12 tonnes net so far this year, with existing gold reserves standing at 84 tonnes. The National Bank of Kazakhstan has also completed a gold purchase of over 1 tonne, confirming that the global trend of official gold buying remains unchanged. This sustained official buying power is a key factor supporting gold prices at the critical $4,000 per ounce level.
Institutional estimates indicate actual gold holdings exceed public data. Commodity analysts at BMO Capital Markets, in a late July research report, identified the major Asian economy's demand as a core variable driving gold prices higher in the second half of the year. The analysts stated that the country holds a significant amount of undisclosed gold inventory. Latest analysis estimates that the nation's above-ground gold stock is substantially higher than official statistics, and it currently accounts for one-third of global gold demand. Despite its large existing gold holdings, institutions conclude that the country's gold allocation demand will not weaken in the medium to long term, with reserve levels potentially approaching those of the United States.
Under the backdrop of currency internationalization, gold purchases still have room to grow. Institutions note that while the country has not disclosed a final target for its gold reserves, combining economic expansion with the developmental needs of currency internationalization suggests that reaching the current gold reserve level of the United States is merely a minimum threshold. Achieving this would require buying an additional 2,500 to 3,000 tonnes of gold, which, depending on the purchase channel, could be realized within 2 to 5 years. To further enhance the global credibility of its currency, the actual allocation target is likely to be even higher.
In summary, sustained central bank gold buying is reinforcing the bottom of the gold market. The long-term pursuit of currency internationalization will continue to generate gold allocation demand, implying that the structural support for the gold market will persist for an extended period. Spot gold prices are currently rising, trading at $4,345.09 per ounce, up 0.30%, with a session high of $4,346.73 and a low of $4,313.16. Today, support for spot gold is seen near $4,300 or $4,240, while resistance lies around $4,390 or $4,440.
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