New players entering the market? The World Gold Council reveals that central banks are taking advantage of the dip to accumulate positions, but gold prices remain under short-term pressure.

Source: Jinshi Data

Under the geopolitical risk and trend of reserve diversification, central banks around the world are expected to continue buying gold. This is the view from the industry organization World Gold Council. The organization represents gold producers and has a clear vested interest in promoting gold’s status in reserve portfolios.

Shaokai Fan, the World Gold Council’s global central bank director, stated on Tuesday that gold’s role as a hedge against de-dollarization and geopolitical risks is expected to prompt central banks that have been absent from the market to buy this precious metal this year.

He noted that in recent months, central banks from countries such as Guatemala, Indonesia, and Malaysia have begun purchasing gold, either returning to the market after a long pause or making their first gold purchases.

“Some new central banks or those that have been inactive or absent from the gold market for a long time are entering the gold market in recent months. I believe this trend may continue into 2026,” he added, noting that some central banks are also buying gold from domestic small-scale producers to support local industries and prevent this gold from flowing to ‘informal participants.’

He also mentioned that during a round of gold selling last October, central banks took the opportunity to increase their holdings, but it is still too early to determine whether a similar situation will occur in this month’s downturn.

After a week of major central bank meetings and escalating geopolitical tensions, gold prices have fallen to a new low for the year due to a significant rise in bond yields. The World Gold Council previously pointed out that the speed and range of market volatility are similar to the safe-haven sell-off phases of 2008 and 2020, when liquidity factors temporarily overshadowed the fundamentals.

Analysts at the World Gold Council wrote in the latest edition of the “Weekly Market Observations” that there is debate regarding the driving factors behind the continued weakness in gold prices.

“Significant increases in real yields, market expectations for an interest rate hike in 2026, combined with deleveraging and profit-taking, have all dampened market sentiment,” they noted. “The speed and breadth of market volatility remind one of the safe-haven sell-off phases of 2008 and 2020, when liquidity patterns temporarily dominated the fundamentals. The prospects of prolonged conflicts in the Middle East are concerning, as they not only elevate humanitarian and geopolitical risks but could also bring about risks of economic stagnation and rising industrial input costs,” they said, “we are currently in a wait-and-see mode.”

This week, there is very little key economic data, and the World Gold Council expects the gold market to continue seeking direction based on daily developments related to the Iran conflict.

“Any signs of the Strait of Hormuz reopening—easing energy supply disruptions—could rebuild investor confidence,” the analysts wrote. “Conversely, ongoing supply disruptions could intensify interest rate hike expectations, although political constraints in the U.S. and the persistently high debt burden may limit the Federal Reserve’s room to raise rates. The risk of stagflation—historically a favorable environment for gold—may rise in this scenario. But for now, liquidity concerns seem to dominate market trends.”

“Although short-term shocks may affect gold prices in the near term, broader trends such as multipolarity, increasing geopolitical fragmentation, and ongoing concerns about sovereign debt will continue to support the strategic allocation value of gold,” the analysts added.

From a technical perspective, the analysts pointed out that gold prices have significantly fallen below the February low of $4,403 per ounce, setting a new low for the year. “This is seen as further strengthening the selling momentum, with the next key support level in the $4,090–$4,066 per ounce range, which includes the 38.2% Fibonacci retracement level of the 2022–2025 uptrend and the long-term 200-day moving average,” they stated. “Given that net long positions are relatively low, we tend to believe that gold prices will attempt to form a bottom here.”

“If the downward trend continues directly and closes consistently below $4,090–$4,066 per ounce, it will indicate further weakness, with the next support looking towards the October 2025 low of $3,887 per ounce,” they added. “Initial resistance is at $4,736 per ounce, followed by $4,844 per ounce; as long as gold prices remain below the 13-day and 55-day moving averages of $4,922–$4,932 per ounce, short-term downside risks will still dominate.”