Central Banks Fuel Gold Demand as Institutional Investors Flee

Central banks have been quietly accumulating gold at an accelerated pace in recent months, bucking the trend of institutional investors who are selling off their holdings. According to data from VanEck, central banks added a net 289 tonnes to global gold reserves during Q2 2026, representing a 62% increase year-over-year.

This surge in official-sector buying is significant because it suggests that central banks are not motivated by short-term price movements, but rather by long-term strategic objectives. These institutions are diversifying their reserves away from concentrated exposure to US dollar-denominated assets and seeking to protect themselves against inflation and currency risks.

In contrast, institutional investors who were previously bullish on gold have been liquidating their positions in the metal. A net 5% of fund managers now classify gold as undervalued, marking a significant shift from earlier this year when it was one of the most crowded trades on the planet.