Global Central Banks Set Q2 Gold-Buying Record, Gold Price Surpasses $4,100
N.R. Finch
Central banks added a net 289 tonnes of gold in Q2 — up 62% year-on-year and a record for any second quarter — while the Fed's rate hold and cooler PCE inflation pushed gold past $4,100. But a sharp Q1 data revision and fracturing demand tell a more complicated story.
How big is 289 tonnes?
Global central banks bought a net 289 tonnes in Q2, up 62% year-on-year — the strongest second quarter on record.
This means → central banks were not gradually accumulating; they were front-loading purchases, with Q2 volume more than five times the revised Q1 figure of 57 tonnes.
The top buyer was the National Bank of Poland (51 tonnes), followed by the People's Bank of China (33 tonnes). A World Gold Council survey found 45% of central banks plan to add gold over the next twelve months.
Why was Q1 data slashed by three-quarters?
The World Gold Council revised Q1 central-bank buying from an initial estimate of 244 tonnes down to 57 tonnes — a cut of 187 tonnes, leaving the weakest first quarter in over a decade.
In plain terms = gold previously counted as "central-bank purchases" was reclassified into "OTC and other" — the banks didn't stop buying; the statistical bucket moved.
After revision, first-half central-bank net demand totals 345 tonnes — the lowest H1 since 2022, a stark contrast with Q2's headline strength.
What drove the V-shaped reversal in gold?
The Fed voted 9-to-3 on July 29 to hold rates at 3.50%–3.75% for a fifth straight meeting. Three regional Fed presidents dissented in favour of a hike.
This means → rates are not climbing further for now, so the opportunity cost of holding gold did not increase — giving the metal breathing room.
The same day, June PCE data came in cooler than expected: headline PCE fell 0.1% month-on-month (the first negative reading since 2020); core PCE rose just 0.1%, below the 0.2% consensus.
The two signals together pushed COMEX gold futures up 1.68% to $4,166/oz, while spot gold rallied from an intraday low of $4,028 back above $4,100.
Who is buying, who is selling, who is holding?
Central banks anchor demand: Q2's 289-tonne net purchase was the single largest demand pillar.
ETFs are bleeding out: global gold ETFs saw net outflows of 45 tonnes in Q2, the main drag on investment demand. Offsetting this, OTC investment — driven largely by Asia — hit 327 tonnes.
Jewellery demand is shrinking in weight, growing in dollars: Q2 jewellery demand fell to 278 tonnes, down 17% year-on-year as consumers shifted to lighter pieces — yet spending rose 14% to $40 billion because of higher prices.
This reflects a paradox: demand is contracting by volume but expanding by value — the price itself is reshaping what demand looks like.
What is happening on the supply side?
Q2 mine production rose 2% year-on-year to 966 tonnes — steady, slightly higher.
Recycled gold supply fell 6% to 326 tonnes.
In plain terms = with gold above $4,100, you would expect more people to sell old jewellery for cash. The drop in recycling suggests holders would rather sit tight, betting on further gains rather than cashing out.
Where do institutions see gold heading? How wide is the gap?
First-half total demand reached 2,522 tonnes (up 2% year-on-year), worth a record $380 billion. The World Gold Council sees investment demand as the main engine for the full year, but says 2025's exceptional strength is unlikely to repeat.
How much higher can gold go this year?
BULL
Targeting above $5,000
Wells Fargo sees year-end at $5,300–5,500; Morgan Stanley forecasts $5,200 for H2.
Central banks keep buying
45% of central banks plan to add gold — a structural demand floor.
BEAR
Significant pullback possible
Bank of America advises waiting for $3,250–3,450 before allocating.
Rate-hike risk not gone
The WGC warns two 25-bp hikes in September and December would pressure gold further.
In plain terms = the most bullish and most bearish forecasts are nearly $2,000 apart — the market is far from consensus on H2 direction, and the September rate-hike probability is the next key test.
Content is for reference only, not financial advice.