Has the global central bank "gold hoarding era" come to an end?

Ask AI · Why is Turkey’s gold data easily misinterpreted by the market?

The hottest recent question is: Are global central banks selling gold? Has the 15-year official “gold hoarding wave” come to an end?

According to Chase Wind Trading Desk, UBS strategist Joni Teves issued a clear judgment in the latest precious metals research report on April 2: The likelihood of central banks experiencing structural shifts and large-scale gold sales is extremely low. Official institutions will still maintain a net buying stance, but the pace of purchases will gently slow down — expected full-year gold purchases around 800 to 850 tons in 2026, slightly below about 860 tons in 2025.

The report targets the most eye-catching recent example — the news that Turkey “sold about 50 tons of gold within a few weeks.” Teves believes: Turkey’s official gold data is mixed with traces of commercial bank positions, swaps, and other operations. Relying solely on headlines to infer “central bank selling” carries high risk; it should wait for more detailed breakdown data before making judgments.

On the price front, UBS defines the short term as “full of noise”: news cycles about geopolitical situations will cause gold prices to continue oscillating and consolidating; but the medium-term logic still points to new highs, and the 2026 average gold price forecast has been lowered to $5,000 (from $5,200, mainly due to Q1 accounting adjustments), with a maintained year-end target of $5,600 (set at the end of January).

Treating “central bank gold sales” as the main reason for this round of pullback is not well-supported; 800-850 tons more resembles a “slowing down” rather than a trend reversal.

The specific scenario market worries about is: if conflicts in the Middle East become prolonged, oil prices push inflation higher, growth weakens, and domestic currencies depreciate, some central banks may be forced to sell gold to cope with pressure. The report does not deny that “individual central banks may sell,” but emphasizes this does not equate to a trend reversal among official sectors.

A key reminder from the report is: over the past 15 years of continuous official sector gold accumulation, it is not rare for “sales” to occur in a single month. The reasons may be pragmatic — central banks that bought cheaply in earlier years may take some tactical profits outside core holdings; gold prices surge triggering rebalancing; natural inflows from gold-producing countries at certain points convert into external sales. In other words, selling can be an action, not necessarily a stance.

The baseline judgment is that net buying still continues, but at a slower pace. The detail lies in the trading habits of official sectors: they are more like “physical buyers,” often providing support during pullbacks, helping the market stabilize more quickly at higher levels; conversely, official sectors usually do not chase the rally, preferring to intervene when prices are more appropriate and volatility is more contained.

This also explains why, when volatility increases, the market suddenly feels “central banks are gone.” The observation in the research is: recent official sectors and other longer-term holders tend to be more cautious, preferring to watch rather than immediately add on every dip.

Turkey’s “50-ton” sell narrative has been amplified, but short-term gold prices are more influenced by the dollar and real interest rates

Turkey’s case is sensitive because it appears to fit the narrative of “central bank starting to sell gold.” But Turkey has certain peculiarities: Some movements may be swaps rather than direct sales; more importantly, the Turkish central bank has long used gold as a policy tool to support liquidity management within the domestic banking system.

Part of the total gold disclosed by Turkey’s central bank corresponds to commercial bank positions. Coupled with policies since 2017 that allow banks and other entities to use gold within the financial system, changes in “total data” do not necessarily mean “central bank selling in the market.” The report’s clear advice: wait for more detailed breakdown data before discussing trends.

The March trading environment faces “dual uncertainties”: on one hand, as Iran-related news heats up, gold prices, which had surged and fallen sharply in January-February, are seeking a new stable range; on the other hand, the macro and asset pricing impacts of Middle East conflicts are nonlinear, and long-term funds are reluctant to bet easily.

When strategic funds that buy on dips are absent, gold prices in the short term are more likely to revert to traditional frameworks: a strengthening dollar, rising U.S. real interest rates, exert downward pressure on gold; bullish traders are further squeezed out, even some shorting forces appear. Additionally, Chinese demand during this phase provides support, with gold prices stabilizing around $4,500 and oscillating near $4,700.

The underlying logic of central banks holding gold: once bought, they don’t sell

The World Bank’s “Fifth Biannual Reserve Management Survey (2025)” explains a deeper question: what do central banks really think about gold? The survey covers holdings up to December 2024, with the highest participation ever among 136 institutions, and for the first time, a dedicated chapter on gold.

A few figures clarify the boundaries of central bank behavior: about 47% of central banks hold gold due to “legacy reasons,” about 26% based on qualitative judgment; only about a quarter incorporate gold into their formal strategic asset allocation frameworks.

More critically, only about 4.5% make short-term tactical adjustments to gold reserves, while the investment style of official sectors is mainly buy-and-hold (about 62%). This profile suggests: even if the pace of buying slows, official sectors are not like traders driven by news, frequently reversing positions.

Regarding the reasons for accumulation, more than half cite “diversification” as the main motive; local gold purchase plans account for about 35%, geopolitical risks about 32%; only about 6% cite “liquidity needs.” The reasons for official holdings of gold have not been invalidated by recent volatility.

Short-term fluctuations are inevitable, but the “new highs are not over” remains the main theme

Returning to the trading perspective, gold is not a straight upward path: in the coming weeks, it may continue to consolidate and fluctuate because the market will constantly reassess geopolitical risks. But the two long-term drivers pushing funds to allocate to gold — growth and inflation risk combinations, and the persistence of geopolitical tensions — are turning "diversification into a more common portfolio move.

Under this framework, the report’s price anchors are: an average of $5,000 in 2026, with a year-end target of $5,600. It also notes that speculative positions have become “cleaner,” while long-term participants remain underweight; if further pullbacks occur, it’s more like a “strategic accumulation window” rather than a trend-ending signal.