Central bank gold purchases are providing a structural floor under prices, with the People's Bank of China leading a wave of sovereign buying during last month's selloff.
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PBoC leads central banks with 15-ton gold purchase in June
Central bank gold purchases are providing a structural floor under prices, with the People's Bank of China leading a wave of sovereign buying during last month's selloff.
Gold held above $4,000 an ounce after central banks bought 15 metric tons during June's rout, with the PBoC making its largest monthly purchase since 2023.
"Central banks used gold's selloff last month to boost their official gold reserves," Krishan Gopaul, senior analyst at the World Gold Council, said.
China's gold reserves rose to 75.44 million fine troy ounces by the end of June from 74.96 million a month earlier, according to PBoC data. The 480,000-ounce increase — equivalent to near 15 metric tons — marked the biggest monthly addition since October 2023, when holdings rose by 740,000 ounces. The value of China's gold holdings fell to $303.72 billion from $340.75 billion in May, reflecting the price decline.
The buying represents a structural shift by sovereign wealth managers to diversify reserves away from the US dollar, with central banks on track to purchase more than 1,000 metric tons for a third consecutive year, according to the World Gold Council.
Gold's June Rout Creates Buying Opportunity
Spot gold tumbled 11.65% in June, its worst monthly decline since October 2008, briefly breaking below $4,000 an ounce. The selloff was driven by a strengthening US dollar and growing expectations that the Federal Reserve would keep interest rates elevated. The Iran war also fueled concerns that inflation could remain sticky despite peace talks, according to Reuters.
Structural Demand Underpins Prices
ING said in a research note Tuesday that continued central bank purchases are providing underlying support for gold prices, highlighting ongoing institutional demand. The buying reflects broader concerns among sovereign entities about fiat currency devaluation and geopolitical hedging, the bank said.
Gold at current levels trades roughly 15% below its all-time high set earlier in 2026, with the LBMA PM fix providing the next key price reference. The Federal Reserve's July 29-30 policy meeting is the next major catalyst for the precious metal.
This article is for informational purposes only and does not constitute investment advice.
[1] Gold: Central bank demand underpins prices – ING[2] China’s central bank buys the dip, adding 15 tons to gold reserves in June[3] Central banks plan first U.S. dollar decline in 3 years; Gold & Euro winning[4] China gold reserves rise most since 2023 even as bullion tumbles[5] China’s PBOC Buys Most Gold Since 2023 as Bullion Swings
