Gold Breaks Downtrend as Central Banks and Asian Demand Provide Support

Gold has broken out of its downtrend and consolidation range that has been in place since late January 2026, potentially completing its bottoming process. The precious metal is holding above $4,000 and pushing further above $4,200, with support coming from technicals to fundamentals.

Shifts in Federal Reserve policy expectations are providing additional fundamental support for the breakout. Although Fed Chair Kevin Warsh has delivered more hawkish signals than expected, only three of 12 voting FOMC members supported a rate hike at the July meeting. With limited incremental information between now and the September meeting, markets are increasingly shifting toward expectations for rates to remain unchanged.

Central banks have also been accumulating gold reserves, with global central banks purchasing a net 288.9 tonnes in Q2 2026, the highest level on record and up 62% from the same period last year. The National Bank of Poland was the largest buyer, adding 51 tonnes, while the People's Bank of China followed with 33 tonnes.

Asian gold demand remains strong, with China and India accounting for around 45% of global jewelry demand in Q2 2026. Chinese banks are also adjusting or discontinuing precious-metals auction trading services, potentially shifting retail gold allocation toward physical gold, accumulation plans, and ETFs.