Central Banks Hoard Gold as Prices Plummet

The recent price action of gold has been puzzling investors. While the metal's spot price took a sharp hit following Federal Reserve Chair Kevin Warsh's Jackson Hole address, central banks were actually buying up gold at a record clip.

According to the World Gold Council, central banks added a net 288.9 tonnes of gold in the second quarter, marking a 62 percent jump from the same period last year.

Poland led the charge with 51 tonnes, while China's 33-tonne purchase marked its largest single acquisition since late 2023.

The buying spree is counter-cyclical, with official-sector institutions stepping in when prices softened. This stands in contrast to Western investment flows, which saw gold-backed ETFs experience net outflows of 45 tonnes during Q2.

Despite the Fed's hawkish stance and a selloff that left gold down 3.2 percent, the metal remains up 10 percent over the past 30 days and is still 29 percent above its 52-week low.