Central Bank Gold Buying Hits Record, Boosting Miner Prospects

Central banks are rapidly increasing their gold reserves, setting a new record in the second quarter of 2026. According to the World Gold Council, they added a net 289 tonnes of gold, a 62% increase from the same period a year earlier. This surge challenges earlier concerns that official-sector buying would decline as gold prices rose. Poland and China were among the top buyers, with Poland adding 51 tonnes and China purchasing 33 tonnes.

Analysts suggest that sustained central bank demand could provide strong support for gold prices, benefiting gold mining companies. George Cheveley, a portfolio manager at Ninety One, noted that central banks remain committed to accumulating gold while being price-sensitive. This could create a floor under gold prices, which would be significant for miners, especially if consensus expectations for lower gold prices prove incorrect.

Gold's role in reserve diversification has grown since Western governments froze Russian US dollar assets following the invasion of Ukraine. The average share of gold in central bank reserves has doubled from 14% to 25% in two years. Cheveley highlighted gold's liquidity, long-term inflation hedge properties, and absence of credit risk as key attractions for central banks.

For investors, the question is whether this official-sector demand will lead to a structurally higher gold-price environment. If prices remain near current levels, gold mining could become extremely profitable, potentially outperforming current consensus expectations. Early October saw gold prices dip slightly from $4,280 to $4,120, but the longer-term outlook remains supported by structural demand drivers.