Central Banks Shift Gold Buying from Reserve Diversification to Sovereign Optionality

Central banks are no longer just buying gold as a background bid. Goldman Sachs estimates that in June, they purchased 57 tonnes of gold, with a three-month seasonally adjusted pace of around 100 tonnes per month.

This is a significant shift from the pre-2022 average of 17 tonnes per month. China is accounting for a large portion of this identifiable demand.

The central bank bid is not just about reserve diversification, but also about sovereign optionality. Reserve managers are thinking not only about how much gold to own, but also where it should be held and under whose jurisdiction.

This structural buyer has a different reaction function than the leveraged community. They don't care about short-term price movements or technical indicators like RSI.