Gold Market Torn Between Central Banks and Hawkish Fed

The gold market is in a state of tension as central banks and the Federal Reserve exert opposing influences. Central banks have been adding to their reserves, purchasing 289 tonnes in the second quarter of 2026, with Poland leading the charge at 51 tonnes. This has led to a sharp rebound from a sluggish start to the year and elevated buying activity seen over the past four years.

The physical market is showing signs of a floor forming beneath prices, with the World Gold Council's report indicating that total global gold demand reached 2,522 tonnes in the first half of 2026, a 2% increase year-on-year. The value of this demand hit an all-time high of $380 billion.

However, the Fed is pushing back against central bank buying, with three members of the Federal Open Market Committee voting against holding rates steady and advocating for an immediate hike. This has led to a strengthening dollar and capped gold's upside.