Global Central Banks Accelerate Gold Hoarding: Q2 Buying Hits 57-Year High
On July 29, 2026, the World Gold Council released its latest report showing global central banks' net gold purchases soared to 289 tons in Q2 2026, a 142% increase year-over-year, setting the highest quarterly record since 1967. This astonishing figure not only surpasses the historical peak of Q1 2022 after the outbreak of the Russia-Ukraine war but also marks an acceleration of collective action by central banks amid de-dollarization and geopolitical risks.
The report noted that the People's Bank of China increased its gold holdings for the 14th consecutive month, buying 56 tons in Q2, bringing total reserves to 2,332 tons, accounting for 8.2% of foreign exchange reserves. The Central Bank of Russia purchased 38 tons under the shadow of sanctions, while emerging economies such as India, Kazakhstan, and Uzbekistan also ranked among the top buyers. Notably, Eastern European countries like Poland and the Czech Republic entered the top ten buyers for the first time, indicating that safe-haven demand is spreading from traditional major powers to regional countries.
Driving Factors Behind Gold Prices Approaching Record Highs
Supported by strong central bank buying, international spot gold prices climbed to $2,538 per ounce during Asian trading on July 29, just a step away from the all-time high of $2,545 set in 2024. As of press time, gold was trading at $2,532, with a cumulative gain of 18.6% year-to-date.
Multiple factors are driving gold prices higher:
- De-dollarization wave: Although the U.S. debt ceiling crisis has temporarily eased, long-term concerns about the dollar's credit system persist. Central banks continue to reduce holdings of U.S. Treasuries and increase gold holdings. The Central Bank of Brazil has even raised its gold reserve target to 15% of total reserves for the first time.
- Geopolitical safe-haven: The stalemate in the Russia-Ukraine war, rising tensions in the Middle East, and renewed disputes in the South China Sea have all strengthened gold's safe-haven attributes. The global conflict index in the first half of 2026 hit a post-Cold War high, prompting sovereign wealth funds and institutional investors to increase gold allocations.
- Sticky inflation expectations: Despite aggressive rate hikes by major central banks, global core inflation remains above target. The U.S. core PCE in June rose 3.4% year-over-year, and the European Central Bank expects inflation to remain above 2% until 2027. Gold's appeal as an inflation hedge remains strong.
- Supply-side bottlenecks: Global gold mine output increased by only 1.2% year-over-year, and recycled gold supply is constrained by environmental regulations. The World Gold Council estimates a supply-demand gap of about 400 tons for full-year 2026.
Structural Shift in Market Participants
In addition to central banks, private investors are also actively entering the market. Holdings of the world's largest gold ETF, SPDR Gold Trust, exceeded 1,200 tons on July 28, the highest since 2022. U.S. retail investors purchased $8.9 billion worth of gold coins and bars through online platforms in Q2, up 67% year-over-year.
Wall Street analysts are generally bullish on gold. Goldman Sachs' latest report raised its year-end 2026 gold price target to $2,700, citing the short-term irreversibility of global central bank gold buying and the possibility that the Federal Reserve may pause rate hikes in September, providing additional support for gold. JPMorgan noted that if global recession risks intensify, gold prices could break through $3,000.
However, some institutions warn of short-term risks. UBS believes that gold prices have partially priced in positive factors, and a rebound in the U.S. dollar index or renewed favor for risk assets could trigger profit-taking. Additionally, high import costs in major physical gold consuming countries like India and Turkey may suppress demand.
Investment Strategy Recommendations
For ordinary investors, professionals recommend a gradual allocation strategy:
- Core allocation: Allocate 5%-10% of assets to physical gold or gold ETFs as a long-term safe-haven base.
- Satellite trading: Use gold mining stocks or gold futures to capture swing trades, but be mindful of leverage risks.
- Avoid chasing highs: Wait for a pullback below $2,450 before making phased purchases, or use dollar-cost averaging to mitigate timing risk.
Conclusion: Gold Bull Market Fundamentals Solid, but Volatility Increases
All factors considered, the global central bank gold buying trend is unlikely to reverse in the short term, and de-dollarization and geopolitical risks will continue to support gold prices in the long run. However, market sentiment has become euphoric, short-term technical indicators show overbought conditions, and investors should remain rational and avoid blindly chasing rallies. Mazhu Investment will continue to track the latest capital flows and market dynamics to help you master the balance between safe-haven and value appreciation.
(Disclaimer: This article is for reference only and does not constitute investment advice. Investors should assess risks themselves.)
