Central banks bought 41 tonnes of gold in May as sovereign bid reshapes reserves

The sovereign bid for gold is accelerating through price declines that would test most institutional investors, with central banks buying 41 tonnes in May even as the metal posted its worst quarterly performance since 2013 and Bitcoin ETFs bled $8.9 billion.

Central banks are treating the price dip as an accumulation opportunity because their investment horizons differ from institutional investors, the World Gold Council said in its 2026 central bank survey. The report found 89% of central bankers expect global gold reserves to rise over the next 12 months, and a record 45% plan to increase their own holdings.

Poland led May purchases with 18 tonnes, its fourth straight month of double-digit buying, bringing reserves to 614 tonnes against a 700-tonne target. China added 10 tonnes — its largest monthly addition since December 2024 and 20th consecutive purchase — lifting official reserves to roughly 2,331 tonnes, or 9% of total reserves. Uzbekistan bought 9 tonnes, Kazakhstan 7, and Singapore returned with its first purchase since September 2025. Gold now accounts for a larger share of global central bank reserves than US Treasuries for the first time since 1996, according to WGC data.

The divergence tests the digital gold thesis that Bitcoin and gold attract the same patient, price-insensitive capital. Central banks operate on multi-year horizons, citing inflation hedging and dollar diversification, while ETF flows track momentum and macro repricing. Bitcoin has no equivalent sovereign bid: no central bank reported adding BTC in May, and the reserve conversation remains confined to a handful of corporate treasuries.

China Extends Buying Streak as India Cools

The People's Bank of China added 480,000 ounces of gold in June, marking its 20th consecutive month of purchases as Beijing pushes to diversify reserves away from the dollar. Total holdings have grown to roughly 2,346 tonnes, under 10% of China's overall foreign-exchange reserves. The steady accumulation has helped stabilize spot prices even as broader demand cools.

In contrast, Indian jewelers cut prices by as much as $19 an ounce this week as sharp volatility froze retail buying. Indian jewelry volumes fell 19% year over year in the first quarter, while investment demand for bars and coins climbed, according to WGC data. The contrasting strategies across Asia's two largest gold markets highlight diverging approaches during a volatile period for the metal.

Zimbabwe Gold Reserves Top 4.5 Tonnes as ZiG Gains Backing

Zimbabwe's gold reserves surpassed 4.5 tonnes while foreign currency receipts reached a record $10.72 billion during the first half of 2026, providing stronger backing for the Zimbabwe Gold currency, according to the Reserve Bank of Zimbabwe. Foreign currency reserves increased to $1.6 billion by the end of June, sufficient to cover about six times the stock of ZiG reserve money. Annual ZiG inflation stood at 4.72 percent at the end of June, remaining below 5 percent despite higher international oil prices.

The sustained sovereign buying creates a structural floor under gold prices that did not exist in previous cycles. With Poland targeting 700 tonnes, China accumulating monthly, and a record share of central banks planning further increases, the buyer base has shifted from price-sensitive institutional investors to price-insensitive sovereign entities. The next test comes when gold's seasonal demand period begins in the fourth quarter, typically the strongest period for physical buying.

This article is for informational purposes only and does not constitute investment advice.