Official Sector Demand Fuels Gold Price, Hawkish Fed Weighs Down Market

Gold prices have been influenced by two opposing forces in recent times - aggressive official sector buying and a hawkish Federal Reserve monetary policy. The metal changed hands at $4,313.43 an ounce on Thursday, up 1.2% from the previous day.

Central banks purchased 288.9 tonnes of gold in the second quarter of 2026, a 62.4% increase from the same period last year. Poland accounted for the largest portion of this total, adding 51 tonnes. China also continued its buying streak, purchasing 20.2 tonnes in August and extending its consecutive months to 22.

The World Gold Council reports that official sector demand is expected to continue, with a Bloomberg survey indicating that 45% of respondents intend to add more gold over the coming year. However, this appetite is running up against structurally constrained supply.

Goldman Sachs warns that if inflation does not shift in the fourth quarter, the Fed may deliver additional rate hikes, which could negatively impact the metal's price.