Central Banks' Gold Surge: What's Driving the Record Buying?

Summary

Central banks significantly increased their gold purchases in the first quarter of 2026, acquiring 244 tons despite record high prices, a trend that has been accelerating for years. This buying spree, exceeding the previous quarter and the same quarter last year, is occurring even as some central banks like Turkey and Russia have reported sales. However, these sales are offset by stronger overall purchases, with unreported buying also remaining elevated, suggesting a broader strategy. Poland, Uzbekistan, and China were among the top buyers. Historically, periods of substantial central bank gold buying have preceded significant price increases, and the current trend suggests central banks are losing faith in fiat currencies, as evidenced by gold's price doubling against the US dollar in just one year. This increased demand for gold as a hedge against currency devaluation and geopolitical instability is expected to continue, with Asian demand, particularly from China, playing a key role in absorbing supply, while Western ETF outflows are being balanced by Eastern inflows.