Investors buoy gold price as central banks slow

AI desk brief

Central-bank buying of gold slowed sharply in July, but the bull case appears increasingly being carried by investment flows rather than official-sector demand. WGC data show net central-bank purchases fell 54% month on month to 23 tonnes from 51 tonnes in June, with China buying 20 tonnes and Poland 8 tonnes while Russia sold 6 tonnes. Through July, central banks have bought about 130 tonnes versus roughly 160 tonnes in the same period last year, yet the WGC still expects them to remain net buyers through 2026.

The more important support came from ETF inflows: physically backed gold funds took in $3bn in July, reversing two months of outflows, lifting holdings by 23 tonnes to 4,068 tonnes. That nearly matched July central-bank buying and pushed year-to-date inflows to $11bn, or 39 tonnes of holdings. Europe led the rebound, Asia remains the biggest contributor on the year, and North America is still in net outflow territory. BMO’s Helen Amos and George Heppel said official buying remains historically elevated and continues to underpin the market.

Price action remains sensitive to rates data. Gold was above $4,475/oz before slipping after a stronger-than-expected U.S. August payrolls report (162,000 jobs, unemployment at 4.1%) reignited rate concerns. Near term, the key question is whether ETF inflows can keep offsetting slower central-bank demand if U.S. real yields and the dollar firm. Sovereign custody trends also remain a secondary support, with the Dutch central bank shifting 86 tonnes from North America toward London and domestic vaults, while Korea disclosed its first gold allocation in 13 years via gold-backed ETFs.