Central Banks Bought 289 Tonnes of Gold Last Quarter. Prices Were Falling the Whole Time.

Published: 07-31-2026, 09:34 am

The world’s central banks did something striking in the second quarter of 2026. While gold posted its steepest quarterly price decline in a decade, they bought more of it than in any Q2 on record.

On July 30, the World Gold Council published its Gold Demand Trends Q2 2026 report. The headline figure: central banks added a net 289 tonnes of gold in Q2 — a 62% jump year-over-year, and the strongest second quarter in the data series. To put that in context, 289 tonnes in a single quarter is more than the total net gold ETF flows recorded anywhere in the world across all of 2023, a year that saw 244 tonnes of net ETF outflows.

Here is what makes the number remarkable. Prices fell sharply from Q1’s elevated levels. Central banks responded by accelerating their purchases.

Why Did Central Banks Buy More Gold When Prices Were Falling?

Reserve managers do not trade gold the way hedge funds do. For a central bank, gold is not a speculative position. It is a structural reserve asset. When prices drop, the logic for a reserve manager does not reverse. If anything, a lower price makes the case for continued accumulation stronger. You are adding to a long-term holding at a reduced cost.

The WGC’s 2026 Central Bank Gold Reserves Survey, covering 76 reserve managers — the highest participation in the survey’s nine-year history — adds the why. 89% expect global central bank gold holdings to rise over the next 12 months. 45% plan to increase their own institution’s reserves. And 74% expect the dollar’s share of global reserves to fall over the next five years.

That final figure is the mechanism. Central banks are systematically rotating out of dollar-denominated assets and into gold. They are doing so regardless of gold’s quarterly price moves. Price shapes the timing at the margin. It does not determine the strategic decision.

Poland and China led the quarter. The National Bank of Poland added 51 tonnes, lifting its reserves to 632 tonnes. The People’s Bank of China purchased 33 tonnes, its largest quarterly addition since Q4 2023. Uzbekistan (16t) and Kazakhstan (15t) also added meaningfully. Russia sold 22 tonnes to cover budget shortfalls, which is why the headline number of 289 tonnes understates the underlying buy-side appetite.

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What Did the Rest of the Q2 Gold Demand Picture Look Like?

Total gold demand — including over-the-counter transactions — held steady year-over-year at 1,269 tonnes in Q2. First-half demand reached 2,522 tonnes, up 2% from a year earlier, with a record value of $380 billion. That record value figure deserves attention: even as gold fell from January’s all-time high, the total dollar value of gold demanded globally hit levels never recorded before.

Within those numbers, demand split along a revealing fault line. Gold ETFs saw 45 tonnes of net outflows as investors sold into falling prices. Meanwhile, physical bar and coin demand held at 307 tonnes, down just 3% year-over-year, with Middle East buyers stepping in aggressively on weakness. Jewellery fell to 278 tonnes, its lowest since the pandemic, as high prices squeezed fabrication volumes. Even so, spending on gold jewellery rose 14% in dollar terms. Wealthier consumers bought lighter pieces at higher prices.

One number most coverage missed: the WGC revised Q1 central bank demand down from 244 tonnes to 57 tonnes, after reclassifying a large portion as over-the-counter demand. OTC buying surged to 327 tonnes in Q2 alone. That category includes sovereign wealth funds and government entities that do not report publicly. When you add it to the 289 tonnes official figure, the institutional appetite for gold in Q2 looks even larger than the headline shows.

What Does This Mean for Your Gold Allocation?

Central banks are the world’s most informed long-duration holders of financial assets. They manage reserves across decades. When surveyed reserve managers report, during a period of falling prices, that 89% expect gold holdings to rise globally and 74% expect the dollar’s reserve share to fall, they are making a structural judgment about the monetary system, not a technical call on a price chart.

The dollar’s share of global foreign exchange reserves has declined steadily for years. Gold’s share has risen. This shift is not driven by speculation. It is driven by the reserve desks of sovereign governments who have reached the same conclusion that individual savers can reach: in a world where the dominant reserve currency can be created in unlimited quantities, an asset that cannot be printed is structurally more valuable to hold.

Q2’s record buying did not prevent prices from falling during the quarter. Demand data is a lagging indicator of structural positioning, not a leading indicator of short-term price. But the 289 tonnes bought into weakness confirms something important: the structural floor beneath gold’s demand is being rebuilt, one quarter at a time. Prices finished July on track for their first monthly gain since February.

The question is not what 289 tonnes does to gold’s price next week. It is what happens when the largest quarterly central bank buy on record meets a recovering market.

SOURCES
1. World Gold Council — Gold Demand Trends Q2 2026
2. World Gold Council — Gold Market Shows Resilience as Price Momentum Cools in Q2
3. World Gold Council — Central Bank Gold Reserves Survey 2026
4. GoldSilver — Gold & Silver Spot Prices

Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Always consult a qualified financial adviser before making investment decisions. 

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