Gold Tries to Navigate Hawkish Fed and Central Bank Buying

Central banks are stockpiling gold at an accelerated pace, reminiscent of the post-pandemic buying spree. The World Gold Council's latest report shows that official-sector demand rebounded in the second quarter of 2026, with a combined 289 tonnes added to reserves.

Poland led the charge, boosting its holdings by 51 tonnes to reach 632 tonnes. China also accumulated gold, adding 33 tonnes to lift its total stash to 2,346 tonnes. In contrast, Russia sold 22 tonnes from its reserves.

The Federal Reserve's refusal to signal any near-term rate cuts is casting a long shadow over gold's appeal. The Fed held the federal funds rate steady in the 3.50-to-3.75 percent range, with three FOMC members voting for a hike. Under new chair Kevin Warsh, the central bank stressed the need to stay the course on inflation.

As a result, markets are pricing in roughly a 78 percent probability of a rate increase in September. Higher bond yields are capping gold's upside, with one analyst noting that when markets expect inflation concerns to translate into higher rates, yields rise and weigh on bullion.