Central Bank Gold Buying Spree Heats Up: Net Increase of 200 Tons in H1 2026
According to the latest data released on July 25, 2026, by the International Monetary Fund (IMF) and the World Gold Council, global central banks net increased their gold reserves by 200 tons in the first half of 2026, up 15% from the same period in 2025. The People's Bank of China increased holdings by 80 tons, Poland by 45 tons, and India by 30 tons, making them the main buyers. As of the end of June 2026, total global official gold reserves had risen to approximately 36,500 tons, a record high.
Why Are Central Banks Still Adding?
De-dollarization and Reserve Diversification
Since the Russia-Ukraine conflict in 2022, the weaponization of the U.S. dollar payment system by the United States has accelerated de-dollarization among non-U.S. countries. National Bank of Poland Governor Adam Glapiński stated clearly at a press conference on July 20: "Gold is the cornerstone of reserve assets, free from any country's sanctions. Poland plans to increase the share of gold reserves to 20%." The People's Bank of China has added for 18 consecutive months, with its gold reserve share rising from 3.3% at the start of 2023 to 5.6% currently, still far below the 60%-70% level of European and American countries, leaving ample room for further increases.
Geopolitical Risk Hedging
In the first half of 2026, renewed tensions in the Middle East, a shaky European security framework, and policy uncertainty in the U.S. election year drove central banks to view gold as the ultimate safe-haven asset. The World Gold Council pointed out in its July report that for every 10% rise in the Geopolitical Risk Index (GPR), central bank gold purchases average an 8% increase over the following two quarters.
Interest Rates and Inflation Expectations
Although the Federal Reserve cut interest rates to 4.25% in June 2026, core PCE remains around 2.8%, above the 2% target. In a negative real interest rate environment, gold's value-preserving function stands out. Central banks in emerging markets, worried about domestic currency depreciation, tend to increase gold holdings to stabilize their currencies. For example, the Reserve Bank of India accelerated gold purchases after the rupee fell below the 85 mark against the U.S. dollar.
Shift in Central Bank Gold Buying Structure: From "Emergency" to "Permanent"
In the past, central bank gold purchases mostly occurred during crises, but data from 2024-2026 shows that gold buying has become a normalized operation. In Q2 2026, global central bank gold purchases reached 110 tons, with 80% coming from non-developed countries. Notably, the Central Bank of the Republic of Turkey, after briefly selling in 2025, resumed net buying in 2026, indicating its recognition of gold's long-term value.
Implications for Investors
Central bank purchases provide a solid demand floor for the gold market, but investors should be mindful of short-term price volatility. Gold prices hit $2,350 per ounce on July 26, 2026, before a slight pullback, with technical factors suggesting profit-taking pressure. However, from an asset allocation perspective, gold's role as portfolio insurance is irreplaceable. Investors are advised to monitor central bank buying cost dynamics and consider moderate allocations to gold ETFs or physical gold bars, suggested at 5%-10% of their portfolios.
Conclusion
The central bank gold buying spree continues, signaling profound changes in the international monetary system. For individual investors, understanding "why buy gold" has evolved from a simple hedging logic to a choice of medium- to long-term asset restructuring. In the wave of diversification, gold's monetary properties are returning.
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