According to the latest data from the World Gold Council, in the final month of the first quarter of 2026, the sovereign sector, a key stabilising force supporting the sustained rise in gold prices for years, unexpectedly became a net supplier. This shift has drawn widespread market attention.
A senior research director for the Asia-Pacific region at the World Gold Council stated on Tuesday, May 5, "Central banks globally were net sellers of gold in March, offloading 30 tonnes. Sales of 60 tonnes from Turkey and 16 tonnes from Russia offset purchases from other regions." She added, "First-quarter data from the State Oil Fund of the Republic of Azerbaijan (SOFAZ) indicates the fund was a net seller of 22 tonnes of gold in Q1 2026."
Major buying nations continued their accumulation, with Poland leading and a major Asian nation extending its purchasing streak. On the buying side, primary demand still came from countries that have been steadily increasing their gold reserves in recent years. The senior research director noted, "The largest buyer in March was the National Bank of Poland, which purchased 11 tonnes, followed by the Central Bank of Uzbekistan with 9 tonnes and the National Bank of Kazakhstan with 6 tonnes. The central bank of a major Asian nation has increased its gold reserves for 17 consecutive months, accelerating its purchases to 5 tonnes in March. Furthermore, Guatemala and the Czech Republic were also net buyers of 2 tonnes each during the month."
Throughout the first quarter, Poland maintained its position as the largest buyer, acquiring a total of 31 tonnes of gold, followed by Uzbekistan with 25 tonnes, Kazakhstan with 13 tonnes, and the major Asian nation with 7 tonnes. Countries including the Czech Republic, Malaysia, Guatemala, the Kyrgyz Republic, Cambodia, Indonesia, and Serbia also each recorded net purchases of 1 tonne or more of gold.
Turkey emerged as the largest seller, with its reserves declining significantly to address liquidity pressures. The director stated, "The largest gold seller in the first quarter was Turkey. Based on published data, its official sector gold holdings decreased by 79 tonnes, with the majority of this decline occurring in March, during which the central bank conducted an additional 80 tonnes in gold swap operations."
The Central Bank of the Republic of Turkey is currently gradually unwinding some of the dollar-for-gold swap positions it adopted during the peak of market pressure to rebuild its gold reserves. According to the latest data, as of April 17, its physical gold holdings had recovered to approximately 730 tonnes. The latest government data shows the central bank increased its gold reserves by 30.7 tonnes over the past week and by a cumulative 36.4 tonnes over the past two weeks, gradually reversing the sharp decline in reserves caused by previous liquidity operations.
In March, the Turkish government opened gold swap positions amounting to approximately 73 tonnes, while the central bank also sold some physical gold, leading to a significant drop in reserves. These swap operations were primarily used to provide US dollar liquidity to cope with accelerating capital outflows and domestic foreign exchange demand, while also supporting the stability of the Turkish lira.
Prior to the outbreak of the Iran conflict, the Central Bank of the Republic of Turkey held nearly 830 tonnes of gold. By the end of March, this figure had fallen by 127 tonnes to 693 tonnes. Following the ceasefire agreement between the US and Iran, market conditions stabilised, pressure on Turkish assets eased, and the central bank was able to begin rebuilding its gold reserves. This reportedly represents the largest decline in Turkey's gold reserves since 2013.
Sovereign gold purchasing volatility has increased, with the ongoing impact of the Middle East conflict becoming more apparent. Central bank gold demand continues to play a significant role in the precious metals market. However, the performance of the sovereign sector has become more volatile and complex, partly because some central banks have been forced to monetise gold reserves to protect economies affected by the Iran conflict. The Central Bank of the Republic of Turkey is one of the most transparent institutions regarding official reserve data disclosure; its gold holdings decreased by over 118 tonnes in March.
The ongoing conflict in the Middle East is significantly impacting global economic activity. Disruptions to global supply chains, particularly in energy markets, are driving inflationary pressures higher, which is also indirectly affecting the monetary policies and gold operation strategies of central banks worldwide.
Although retail investment demand has been somewhat dampened by inflation concerns stemming from high oil prices, gold demand from central banks has remained relatively robust. Looking ahead, changes in the role of the sovereign sector in the gold market will continue to have a significant impact on global precious metal price trends and reserve asset allocation.
Overall, the gold market presented a complex picture in the first quarter of 2026. On one hand, traditional buyers like Poland and the major Asian nation continued to increase their holdings, supporting gold demand. On the other hand, countries like Turkey sold gold significantly to address crises, causing the sovereign sector as a whole to become a net supplier. This change reflects the profound impact of geopolitical conflicts on national economic policies and also suggests that the global gold market may face greater volatility and uncertainty in the future.
Investors and market observers need to closely monitor the subsequent gold operation trends of major economies' central banks.
As of 14:29 Beijing time on May 6, the spot gold price was reported at $4,665.99 per ounce.
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