Central banks turned the decline in gold prices into a buying opportunity

Global gold demand decreased by 1 percent in the third quarter of the year compared to the same period last year, falling to 1369 tons. On the other hand, central banks continued to increase their reserves by using the decline in gold prices as a buying opportunity.

The World Gold Council (WGC) published the "Global Gold Trends" report for the third quarter of 2026.

According to the report, 211 tons of inflow into gold-backed exchange traded funds (ETF) was recorded in the third quarter. High bond yields, a strong dollar and financial concerns despite the easing in geopolitical tensions supported demand for gold funds.

In the same period, gold demand for jewelery purposes decreased by 17 percent on an annual basis to 313 tons. Thus, jewelry demand fell to its lowest third quarter level since 2000.

Gold demand for investment purposes, excluding over-the-counter markets, decreased by 19 percent compared to the same period last year, reaching 268 tons.

Gold purchases by central banks exceeded 321 tons

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

This decline in gold prices paved the way for central banks that wanted to strengthen their reserves to accelerate their purchases.

Gold purchases by central banks increased by 42 percent in the third quarter compared to the same period last year, reaching 321.2 tons. Thus, purchases exceeded the quarterly average of the last five years, which was 227 tons.

According to official data, among the central banks that purchased the most gold in the third quarter, China and Poland ranked first with 63 tons and 40 tons, respectively. The central banks of Kazakhstan and Uzbekistan also added 14 tons of gold to their reserves.

The World Gold Council estimated that the gold purchases, which were not reflected in official records, were approximately 120 tons.

With the latest purchases, the annual net gold purchase of central banks worldwide reached 675 tons.

The Council updated its central bank gold demand forecast for 2026 upwards, following the strong performance in the third quarter. Accordingly, total purchases throughout the year are expected to be at least at the level of 848 tons recorded in 2025.

The decline in prices supported the demand of central banks

Analysts state that central banks continue to increase their gold holdings in order to diversify their foreign exchange reserves.

It is stated that the sharp decline in gold prices, which reached its historical peak in January by exceeding 5 thousand 595 dollars per ounce, creates a buying opportunity for institutional investors.

Experts point out that central banks act as "highly price sensitive" buyers in the gold market. Accordingly, purchase volumes can be increased in order to expand reserves in periods of declining prices.

While basic decisions regarding central banks' gold purchasing strategies are taken by senior management, transactions are carried out by professional teams responsible for the daily management of foreign exchange portfolios.

Analysts state that the average cost of purchased gold is regularly monitored and therefore purchases can accelerate in periods when prices are low.

37 percent of gold purchases were not reflected in official records

The report of the World Gold Council also pointed out that not all gold purchases made by central banks are disclosed to the public.

Recalling that in the past, major buyers such as China and Russia increased their gold reserves without official notification, the report estimated that approximately 37 percent of the total purchases in the third quarter consisted of undisclosed "secret" transactions.

On the other hand, while the demand for gold-based ETFs was above expectations, a slowdown was observed in physical gold investments.

The council reported that although gold bullion and coin demand remains relatively resilient, it is losing momentum noticeably in the second half of 2026.

According to the data of the London Bullion Market Association (LBMA), the ounce price of gold was at an average level of 4 thousand 262.2 dollars in the third quarter.

Thus, the average ounce price of gold increased by 23 percent compared to the same period last year.