Gold Prices Consolidate Amid Central Bank Buying and Mixed Demand

Gold prices are currently trading within a range, remaining in a consolidation zone. Although gold is down 11% in the last six months, the price is almost at the same level as seen at the start of this year. From the peak price of $5,602, gold currently trades around $4,200. For those like the global central banks who hold conviction of prices moving higher in the medium to long term, the last 3-6 months may have provided this buying opportunity. According to the World Gold Council’s latest report for June, central banks continued their gold buying spree during the month, purchasing 51 tonnes. Poland and China continued to lead the accumulation. Other buyers for the month included Uzbekistan, Kazakhstan, Jordan, Czech Republic, Ghana and Georgia, while net sellers this month were Russia and Turkey. Poland was the largest gold buyer in June, according to the World Gold Council. The National Bank of Poland added 19 tonnes, followed by the People’s Bank of China, which added 15 tonnes, extending its monthly buying streak to its 20th consecutive month. Singapore also added 7 tonnes and Czech Republic added 2 tonnes during the month. As of H1 2026, reported central bank buying reached 102 tonnes, with purchases spread across a broad cohort of emerging market central banks. In the first half of 2026, Poland remains the top buyer (82t), followed by Uzbekistan (41t), China (40t) and Kazakhstan (27t). Other major net buyers include Czech Republic (11t), Singapore (10t), Chile (8t), Jordan (6t) and Ghana (6t). Smaller buyers remain diversified within emerging markets. Turkey remains the largest year-to-date seller (83t) with most of its selling activity concentrated in Q1. Sales in Q2 were a modest 4t, with a reduction in swaps recorded at the end of June. Russia also sold gold, with 44t net sales year-to-date. According to the World Gold Council’s June highlights, gross purchases for the month stood at 63 tonnes, while gross sales came in at 12 tonnes. This left reported net buying in 2026 year-to-date at 102 tonnes, with the 12-month average at 27 tonnes. Although the RBI’s gold holdings have remained steady at 880t since mid-2025, gold’s share of total reserves has risen from 12% to 16%, driven by the 70% rise in gold prices and the consequent value increase. Compared to the same time last year, Indians are buying less jewellery. Jewellery demand saw a sequential recovery, rising 14% quarter-on-quarter to 75t, although it fell 15% year-on-year. In China, the fall was steeper at 28%. Globally, India is still ahead in jewellery demand for Q2. Indian gold demand also decreased in Q2 to 131t, a 6% year-on-year decline, while spending reached a Q2 record of INR 1,979 billion (US$21 billion), a 50% increase year-on-year. Investment demand decreased to 54 tonnes from an average of 100 tonnes in the last three quarters, remaining above the long-term average of 49 tonnes since 2000. Gold supply hit a six-year low due to reduced bullion imports, although adequate inventories and recycling offered some protection. In short, jewellery demand rose quarter-on-quarter but fell year-on-year, while investment demand increased year-on-year but eased sequentially. Demand during the quarter was largely influenced by government policy measures, an austerity appeal, a mid-May import duty hike, and a seasonally unfavorable buying period. Gold ETF demand fell to 4 tonnes in Q2, over 80% lower than the record 20 tonnes in Q1 and the lowest since Q2’25. India, the UK, and Hong Kong were among the few markets with positive demand, while the US and China experienced significant net outflows of 44 tonnes and 22 tonnes, respectively. Flows into Indian gold ETFs were positive in April. May recorded the first monthly net outflow since April 2025, reflecting profit-taking after the 9% import duty hike lifted domestic gold and ETF prices. But the outflows were short-lived. Investors returned from early June to buy into the price dips, even as global outflows continued. H1’26 ETF demand reached a record 24t, up 163% year-on-year, despite a slowdown in Q2. Total holdings rose to 119t by the end of Q2, with AUM increasing to INR 1.7 trillion (approximately US$17.6 billion), reflecting sustained investor interest. Gold prices experienced a moderation in Q2 2026 after a strong rally in 2024 and early 2025. The average LBMA Gold Price PM decreased by 8% quarter-over-quarter, while the domestic MCX spot price remained stable due to higher import duties and a 4% depreciation of the rupee. Despite this quarterly decline, prices were still significantly higher than the previous year, with increases of 37% internationally and 59% domestically. Gold prices remain pressured, largely due to the Iran war and the blockade of the Strait of Hormuz, a critical chokepoint that accounts for about 20% of global oil traffic. There’s another factor weighing heavily on gold. Gold prices are negatively correlated with interest rates; when rates rise, gold prices decrease, and when rates fall, gold prices increase. Gold has increased by 5% over the past five days, driven by expectations that the US Federal Reserve may not raise interest rates in the upcoming September FOMC meeting. Gold prices’ future trajectory remains uncertain. Proponents believe a structural bull market may be emerging, as suggested by long-term charts , though there could be potential obstacles ahead. : This article is based on data from the World Gold Council and market observations, and is for informational purposes only. It should not be construed as investment advice. Gold prices are subject to market risk and can fluctuate based on macroeconomic and geopolitical factors. Readers are advised to consult a qualified financial advisor before making any investment decisions related to gold or other assets.