Striking gold report from the World Gold Council: Central banks see it as a buying opportunity

The "Global Gold Trends" report of the World Gold Council (WGC) for the third quarter of the year has been published.

According to the report, there was an inflow of 211 tons into exchange traded funds (ETF) in the third quarter of the year, while financial concerns supported gold funds despite high bond interest rates, strong dollar and easing geopolitical tensions.

In the same period, jewelery demand fell 17 percent to 313 tons, recording the weakest third quarter performance since 2000.

Gold purchases for investment purposes (excluding over-the-counter markets) also decreased by 19 percent compared to the July-September period of last year, decreasing to 268 tons.

CENTRAL BANKS TURNED FALLING PRICES INTO AN OPPORTUNITY

Ounce gold prices, which reached their historical peak of 5 thousand 595 dollars in January, fell by 29 percent from the peak to 3 thousand 900 dollars due to the developments in the Middle East, which increased oil prices and high interest expectations.

Taking this correction in prices as an opportunity, central banks returned strongly to the market to increase their reserves.

Gold purchases by central banks reached 321.2 tons in the third quarter, an increase of 42 percent compared to the same period last year, surpassing the 5-year quarterly average of 227 tons. In the officially announced purchases, the Central Bank of China took the lead with 63 tons and the Central Bank of Poland with 40 tons. Kazakhstan and Uzbekistan added 14 tons of gold each to their reserves. The World Gold Council estimates that unreported secret purchases are around 120 tons. With the latest purchases, the annual net purchase of central banks around the world reached 675 tons. Following this performance, the Council revised the central bank demand forecast for 2026 upwards and announced that it expects total purchases to be at least at the level of 848 tons in 2025.

"PRICE SENSITIVITY" OF CENTRAL BANKS TRIGGED PURCHASES

Analysts note that central banks remain extremely willing to include gold holdings in their foreign exchange reserves. The sharp correction in gold prices, which reached a historical peak in January by exceeding $5,595 per ounce, prepared a suitable basis for corporate buyers. It is emphasized that central banks, which see the decline in prices as an opportunity to expand their reserves, act as "highly price sensitive" buyers in the market.

Experts state that although the basic decisions regarding gold purchase programs are taken by the senior management of central banks, the transactions are carried out by professional teams responsible for the daily management of the foreign exchange portfolio. Stating that the average cost of purchased gold is constantly monitored, analysts point out that central banks tend to increase the purchase volume in periods when prices are low.

- Official data is just the tip of the iceberg

The report also mentions that central banks' gold purchases are not always transparently shared with the public. Recalling that in the past, large-scale buyers such as China and Russia expanded their reserves without making official statements, the World Gold Council (WGC) estimates that approximately 37 percent of total purchases in the third quarter consisted of "secret" transactions that were not reported.

On the other hand, the report pointed out that although the demand for exchange-traded funds (ETFs) exceeded expectations, there was a slowdown in physical investments. The Council announced that although bullion and coin demand remains relatively resilient, it will slow down noticeably in the second half of 2026.

Meanwhile, according to the London Bullion Market Association (LBMA), the ounce price of gold increased to an average of 4 thousand 262.2 dollars in the third quarter. There was a 23 percent increase in the ounce price of gold compared to the same quarter last year.