Investor Demand Stepping Up as Central-Bank Gold Buying Slows

Gold prices have maintained near-record highs despite a significant drop in central-bank buying. According to new data from the World Gold Council, net official-sector purchases decreased by 54% in July, falling to 23 tonnes from 51 tonnes in June.

The decline was led by Russia, which sold six tonnes, while China and Poland remained among the top buyers with 20 tonnes and eight tonnes, respectively. Turkey, Jordan, and Uzbekistan each sold about one tonne.

Despite this moderation, investment demand is taking on a bigger role in supporting the market. Global physically backed gold exchange-traded funds drew $3 billion of net inflows in July, reversing two straight months of outflows.

The increasing importance of investor flows may have implications for miners as well. Abhi Pingle, co-founder of crypto-based gold-finance platform Theo, notes that major producers have become cash-rich but increasingly reserve-poor, which could lead to more acquisitions of developers and juniors holding undeveloped ounces.