Gold's 'Strongest Tailwind' Shifts: WGC Warns of Brakes on Global Central Bank Buying Spree

The World Gold Council (WGC) latest report indicates that global central banks' net gold purchases in the second quarter rebounded to 289 tonnes, setting a new historical high. However, the full-year purchase volume is unlikely to maintain last year's peak. This suggests that the 'central bank gold-buying spree,' which has been a key driver supporting gold's price strength over the past four years, may be gradually losing its momentum as a pillar for bullish sentiment.

WGC has also made significant revisions to global central bank gold purchase data. The data shows that the first quarter's global central bank gold purchases were sharply downgraded from the initially estimated 244 tonnes to just 57 tonnes, marking the lowest first-quarter level in over 15 years.

Over the past four years, central banks worldwide have consistently increased their gold holdings on a large scale in response to portfolio diversification, de-dollarization, and geopolitical risks, becoming a crucial force driving gold prices to record highs.

However, this substantial data downgrade has drawn market attention. WGC officially explained that the adjustment was primarily due to 'reclassification of certain transactions'—specifically, some transactions previously categorized as official buyer purchases are now classified under 'over-the-counter (OTC) and other' categories.

This phenomenon highlights the current challenges in tracking central bank gold purchase data. Central banks have no mandatory disclosure obligations for gold buying activities. Since the outbreak of the Russia-Ukraine conflict, some emerging economies have tended to reduce disclosure of their gold holdings to avoid sanction risks.

John Reade, WGC's market strategist, candidly admitted that since 2022, the quality of information publicly disclosed by central banks has clearly declined, turning the data compilation process into a 'cat-and-mouse game' of tracking and counter-tracking.

Despite expectations of a downward revision in annual data, WGC emphasizes that central banks' long-term demand for gold remains unchanged. According to its '2026 Global Central Bank Gold Reserve Survey' released in June this year, as high as 45% of reserve managers plan to increase their gold holdings within the next year—a record high.

Shaokai Fan, head of WGC's central bank division, pointed out that the recent correction in gold prices has not affected central banks' willingness to add to their holdings, and countries' optimism toward gold is even more positive than before.

Although central bank gold purchase data may contain inaccuracies due to opaque disclosures and annual totals may fall below last year's levels, gold's core status as a safe-haven asset remains solid. Central banks are expected to continue strong net buying, providing a firm floor of support for gold prices.