Central Banks Keep Buying Gold: Emerging Markets Add Reserves, Precious Metals Supported Long-term

On July 28, 2026, the World Gold Council (WGC) released its latest Central Bank Gold Reserves Quarterly Report, showing that global central banks net purchased 186 tons of gold in the second quarter of 2026, a year-on-year increase of 12%, continuing the strong reserve-building trend since 2022. Emerging market central banks were the main driving force, with China, India, Turkey, Kazakhstan and others making large-scale purchases, providing solid support for gold prices above $2,000 per ounce.

Emerging Market Central Banks Lead the Buying Spree

The report noted that the largest buyer in Q2 was the People's Bank of China, which increased its gold reserves by 37 tons, bringing total reserves to 2,350 tons, raising the share of foreign exchange reserves to 5.2%. The Reserve Bank of India purchased 19 tons, totaling 850 tons. The Central Bank of Turkey was also active, adding 15 tons. Additionally, Poland, Singapore, the Czech Republic and others made moderate purchases. A senior analyst at the World Gold Council said: 'Emerging market central banks are systematically increasing gold reserves, both to diversify foreign exchange reserves and as a precaution against geopolitical risks.'

Dual Drivers: De-dollarization and Geopolitical Risks

From a macroeconomic perspective, the sustained central bank gold buying is underpinned by a deep de-dollarization trend. Since the outbreak of the Russia-Ukraine conflict, the freezing of Russian dollar assets by the US and its allies has made many countries aware of the potential risks of dollar reserves. Meanwhile, US-China trade frictions and turmoil in the Middle East have further strengthened demand for safe-haven assets. Gold, as the ultimate reserve asset free of sovereign credit risk, naturally becomes the preferred choice for central banks. Data from the International Monetary Fund (IMF) shows that the US dollar's share in global central bank foreign exchange reserves has dropped from 65% in 2015 to 54% in Q2 2026, while gold's share has risen from 10% to 16%.

High Gold Prices Do Not Dampen Buying Enthusiasm

Notably, despite gold prices currently being at historically high levels above $2,000, central bank purchases have not slowed significantly. Unlike 2013 when central banks took advantage of a price crash, this round of central bank buying is more strategic and continuous. The People's Bank of China has added gold for 32 consecutive months since November 2022, and the Reserve Bank of India has bought almost every quarter since 2020. This 'regardless of cost' behavior reflects a high level of recognition of gold's strategic status. A Goldman Sachs precious metals analyst noted: 'Central bank buying provides a solid floor for gold prices; even if speculative funds flow out, central bank buying can offset some selling pressure.'

Divergent Trends for Silver, Platinum, and Palladium

Compared to strong gold demand, the silver and platinum group metals markets show divergence. Silver benefited from industrial demand growth such as photovoltaics, with global industrial silver use up 8% year-on-year in Q2, but investment demand declined, leaving silver prices narrowly fluctuating around $30. Platinum was weighed down by weakening automotive catalyst demand, coupled with supply recovery from South African mines, pushing prices down to below $900. Palladium faces long-term pressure from electric vehicles replacing gasoline cars, but short-term inventory tightness supports prices around $1,200. The World Platinum Investment Council said central bank interest in platinum is limited, as it is more influenced by industrial cycles.

Outlook: Long-term Allocation Value of Precious Metals Unchanged

Looking ahead to the second half of the year, the market generally expects the Federal Reserve to end its rate hike cycle, with a weaker dollar set to benefit precious metals again. But the more critical variable remains the pace of central bank gold buying. The World Gold Council expects full-year 2026 central bank purchases to exceed 800 tons, remaining at historically high levels for the third consecutive year. A commodity strategist at ABN AMRO said: 'Central bank buying is changing the supply-demand structure of the gold market, reducing the relative influence of investment demand. As long as central banks continue to buy, it's hard to see a deep correction in gold prices.' For investors, tracking changes in central bank gold reserves has become an important indicator for judging long-term gold price trends.

As of press time, London spot gold was trading at $2,038 per ounce, up 0.3% intraday; silver at $31.2 per ounce; platinum at $915 per ounce; palladium at $1,235 per ounce. The market awaits this week's Fed interest rate decision and US GDP data, with gold prices likely to remain range-bound in the short term. However, in the medium to long term, the wave of central bank gold buying has injected strong structural buying into the precious metals market, and any significant correction may be seen as an opportunity to increase holdings.