Gold Price Reverses Slide as Central Banks' Gold Holdings Rise

The price of gold has made a comeback in London's spot market, reversing its previous 3.8% slide this week. This surge is linked to doubts about whether the US Federal Reserve will raise Dollar interest rates once or twice before the end of the year.

New York Federal Reserve President John Williams attributed the rise in government borrowing costs to a strong US economy and economic outlook, rather than financial conditions affecting the economy.

However, European Central Bank economists and policy advisors highlighted that the rise in inflation has been driven by higher energy costs, contrasting 2026 with the post-pandemic inflation of 2021-22. They called for a distinct policy response instead of hiking interest rates hastily.

The Netherlands announced this week that it has improved the liquidity and tradability of its gold reserves, transferring part of its holdings from New York and Ottawa to London. This move is seen as making the country better prepared for severe crises amid increasing geopolitical unrest.

According to the World Gold Council, central banks added 23 tonnes to global official gold reserves in July, with China and Poland leading the momentum. Poland aims to grow its domestic holdings towards a third of its total, while China is widely believed to be buying more gold than it reports.