Central Banks Fuel Gold Rally as Reserves Surge

Gold's recent rally has been fueled by central banks stockpiling the metal at an unprecedented rate. The World Gold Council reported that central banks purchased a net 288.9 tonnes of gold in the second quarter, a 62 percent jump from the same period last year.

This surge in demand is not limited to individual countries; Poland led the charge with 51 tonnes, while China's central bank added 33 tonnes, its largest quarterly purchase since late 2023.

Furthermore, a World Gold Council survey of 74 central banks found that 45 percent plan further purchases over the coming twelve months, the highest share recorded in that poll since 2018. Global reserves rose by a net 41 tonnes in May alone, led by Poland, China, Uzbekistan and Kazakhstan.

The rally has also been driven by private money, with the SPDR Gold Trust absorbing roughly $637 million in net inflows on a single day in early August. Net gold imports via Hong Kong into China climbed about 11 percent month-on-month in July, underpinned by robust investment demand.