Gold's Official Buyers Power Through as Speculators Retreat

The gold market is experiencing a two-speed phenomenon, where official buyers continue to accumulate gold at an unprecedented pace, while speculative traders retreat in response to concerns about US interest rates. Spot gold prices have dipped to $4,375.05 per ounce, down 1.7% on the day and 6.1% on the week. However, this pullback has not affected the structural bid for gold, which remains strong due to central banks' continued buying.

Central banks added a net 289 tonnes of gold in the second quarter, more than five times the 57 tonnes accumulated in the first three months of the year, and a record for any second quarter on record. A survey found that 45% of central banks intend to increase their reserves over the coming year. China's central bank lifted its hoard by 20 tonnes in July to an all-time high of 2,377.5 tonnes.

Retail and institutional investors are also joining the buying party, with physically backed gold ETFs absorbing $3 billion in net inflows during July. The speculative crowd has turned more constructive, with net-long positions among speculative traders climbing from 222,200 to 243,300 contracts. Analysts have upgraded their price targets for gold, with J.P. Morgan forecasting a range of $6,000 to $6,300 per ounce in 2026.