Gold loses 16% in a quarter, but central banks continue to buy: a market paradox
The precious metals market is experiencing one of the most powerful quarterly crashes in recent decades. Gold fell by about 16% in the second quarter, marking its worst performance since 2013. By the end of June, quotes dropped to $3,942 per ounce, the lowest level since November 2025.
A whole range of factors is putting pressure on gold. First and foremost, this is the tightening of the Federal Reserve's monetary policy and expectations of further rate hikes. Investors are reassessing their positions, and banks are one by one adjusting their forecasts. Goldman Sachs analysts lowered their annual forecast to $4,900 per ounce, while Deutsche Bank warns that with three or four rate hikes, quotes could fall to $3,800. Geopolitical instability in the Middle East, which usually supports demand for safe-haven assets, has not been able to offset the pressure from the dollar and interest rates this time.
Who is buying on the dip?
Against this gloomy backdrop, the behavior of global central banks looks particularly interesting. Contrary to the market trend, they continue to actively increase their gold reserves. According to data for May, regulators collectively purchased 41 tons of the precious metal.
Poland became the absolute leader. The National Bank of Poland bought 18 tons — for the fourth consecutive month, the increase has exceeded ten tons. Since the beginning of the year, the country has purchased 64 tons, bringing total reserves to 614 tons. China took second place: the People's Bank of China increased its reserves by 10 tons, making its twentieth consecutive purchase. China's reserves now stand at about 2,331 tons.
Notably, Singapore resumed purchases. The Monetary Authority of Singapore acquired 4 tons — its first transaction since September 2025. Moreover, in October 2026, the authority plans to launch precious metals storage services for other central banks. Uzbekistan and Kazakhstan also increased their reserves by 9 and 7 tons, respectively. Among the sellers were Turkey and Russia.
Looking ahead
A 2026 survey by the World Gold Council shows that 89% of respondents expect global gold reserves to grow over the next 12 months, while 45% predict an increase in their own countries' reserves. However, it is important to understand: the published data reflects the situation as of May — before the massive sell-offs in June.
The key question now is whether central banks will maintain confidence in gold's prospects after the continued decline in quotes. The next monthly report will provide the answer. If regulators continue buying, it will be a powerful signal that the current correction is seen as an entry opportunity, rather than the start of a long-term downtrend.
Expert opinion: In my view, we are witnessing a classic conflict between short-term market conditions and long-term strategy. Central banks, especially from developing countries, are diversifying their reserves toward gold, seeing it as a hedge against geopolitical risks and de-dollarization. As long as the Fed continues tightening, gold will remain under pressure, but institutional demand at historical lows could form a solid bottom. Investors should closely monitor central bank purchase data for June — this will be a key indicator of market sentiment.