Central Banks Fuel Gold Price Volatility with Record Acquisition
Central banks have increased their gold holdings at an unprecedented rate, buying 289 tonnes in Q2 2026. This move comes as investors are showing less enthusiasm for gold, with demand dropping to 262 tonnes due to ETF outflows and a decrease in bar and coin sales.
The Federal Reserve's decision to keep interest rates unchanged in late July has also contributed to shifting expectations around short-term rates. As a result, the price of gold has dropped 1.15% to $4,056.
Technically, gold is trading below its key moving averages and has strong bearish momentum, with many indicators suggesting oversold conditions and intraday selling dominance. The XAU price is expected to remain within a range of $4,028 to $4,083 over the next 2-3 sessions.
The increased central bank demand for gold may seem like a positive sign, but it's offset by weak investor demand amid geopolitical uncertainty. The current environment suggests that any meaningful upside reversal in gold prices is unlikely, and the risk of a downward extension remains high.