Gold Demand Holds Despite Weakness as Central Banks Keep Buying

Central banks continue to buy gold, with a significant increase in purchases during Q2. According to Crux Investor, central banks bought 289 tonnes of gold, up 62% year over year, led by Poland and China. This is despite Western gold ETFs recording outflows, losing 61 tonnes in H1, their weakest first half since 2013.

The People's Bank of China bought 33 tonnes in Q2, its largest quarterly purchase since Q4 2023, raising reported reserves to 2,346 tonnes. A World Gold Council survey found that 89% of central banks expect global gold reserves to grow over the next year, reinforcing continued official-sector demand.

ING said the Fed is unlikely to delay another rate hike unless economic data weakens, but central banks continue buying based on long-term reserve objectives rather than short-term rate expectations. In the base case, markets continue pricing no change at the October Fed meeting, keeping gold near current levels through Q3.