Gold Demand Shifts as Central Banks and Washington's Fiscal Policy Send Prices Soaring

Gold's price has reached new heights, closing at $4,671.20 on Friday, marking its third consecutive weekly gain. But beneath this momentum lies a more significant shift in demand composition.

The Polish central bank has added 63.6 tonnes of gold to its reserves, lifting its total to 613.85 tonnes and placing it among Europe's largest official gold holders. This trend is not unique to Poland; central banks across Central and Eastern Europe are diversifying their reserves as a hedge against geopolitical tensions and currency volatility.

Not all countries are following this trend, however. Russia's central bank sold 22 tonnes of gold in the second quarter, making it the world's largest net seller of official gold over that period. This divergence highlights that official demand is driven by country-specific circumstances rather than a single global impulse.

The World Gold Council's 'Gold Demand Trends' report shows total demand holding steady at 1,269 tonnes, including over-the-counter activity. Central bank purchases recovered to 289 tonnes, while jewelry demand slumped to a pandemic-era low of 278 tonnes.