Gold loses 16% in a quarter: central banks ramp up purchases amid the decline
The precious metals market is experiencing one of its most challenging periods in recent years. The price of gold has been declining for the fourth consecutive month: in June, the drop was 11.7% after a modest decrease of 1.8% in May. As a result, the price per ounce fell to $3,942 — the lowest level since November 2025. Over the second quarter, the metal lost approximately 16%, marking its worst quarterly performance since 2013.
Macroeconomic Pressure and Bank Forecasts
The main cause of the collapse is the tightening of monetary policy by the U.S. Federal Reserve. Markets are pricing in a high probability of additional rate hikes, which traditionally pressures assets that do not generate interest income, including gold. Major banks are revising their estimates: Goldman Sachs analysts have lowered their annual forecast to $4,900 per ounce, while Deutsche Bank warns that with three to four rate hikes, prices could fall to $3,800.
Central Banks Act Against the Trend
However, amid market pessimism, official demand from central banks paints a completely different picture. According to my data, global regulators collectively purchased 41 tons of gold in May. Poland was the absolute leader: the National Bank of Poland bought 18 tons, marking the fourth consecutive month with an increase exceeding ten tons. Since the start of the year, the country's reserves have grown by 64 tons, reaching 614 tons.
The People's Bank of China is also keeping pace — 10 tons in May marked the twentieth consecutive purchase and the largest replenishment since December 2024. China's reserves now stand at approximately 2,331 tons. Notably, Singapore returned to the market after a long hiatus: the Monetary Authority of Singapore purchased 4 tons — its first transaction since September 2025. Uzbekistan and Kazakhstan increased their reserves by 9 and 7 tons, respectively. Meanwhile, Turkey and Russia acted as net sellers.
Looking Ahead
The World Gold Council's 2026 survey shows that 89% of respondents expect global gold reserves to grow over the next 12 months, while 45% forecast an increase in their own countries' reserves. It is important to note that the published data reflects May activity — before the massive June sell-offs. The July report will serve as a litmus test: will central banks maintain confidence in gold's prospects after the continued decline in prices?
My opinion: The current dynamics create a classic divergence scenario. While speculative capital flees gold under the pressure of the Fed's hawkish rhetoric, institutional players in the form of central banks are building up positions. If the purchasing trend continues, it could form a strong bottom and pave the way for a reversal in the fourth quarter.