Central Bank Gold Buying Surges 62% Signals De-Dollarization

Global central banks made record net gold purchases of 289 tonnes in the second quarter of 2026, a 62% year-over-year increase, according to the World Gold Council’s Gold Demand Trends Q2 2026 report. The buying surge occurred despite gold prices falling approximately 16% during the quarter — the steepest quarterly decline in a decade — underscoring the strategic, rather than speculative, nature of central bank accumulation.

Record Buying Led by Poland and China

The National Bank of Poland was the quarter’s largest buyer, adding 51 tonnes to bring its reserves to 632 tonnes, as The National reported. The People’s Bank of China followed with 33 tonnes — its largest quarterly purchase since Q4 2023 — extending its consecutive monthly buying streak to a record 20 months and lifting China’s official gold reserves to 2,346 tonnes, approximately 8% of total foreign exchange reserves.

Other notable buyers included Uzbekistan (16 tonnes), Kazakhstan (15 tonnes), Jordan (6 tonnes), and the Czech Republic (6 tonnes). The Bank of Russia was the largest seller at 22 tonnes, liquidating gold to help cover a federal budget deficit of nearly 6 trillion rubles in the first half of 2026.

A Structural Vote for De-Dollarization

The surge in central bank buying signals a deeper structural transformation in global reserve management. According to the World Gold Council’s Central Banks section, the WGC’s 2026 Central Bank Gold Reserves Survey — covering 76 reserve managers, the highest participation in the survey’s nine-year history — found that 89% of reserve managers expect global gold holdings to rise over the next 12 months, while a record 45% plan to increase their own reserves. Perhaps most tellingly, 74% expect to hold less US dollars over the next five years.

Jia Shuchang, World Gold Council Asia-Pacific (ex-India) Research Head and China Industry Development Deputy Director, explained the driving forces behind this shift: “Central bank reserve management officials generally believe that the most direct drivers for allocating gold are, on one hand, the need for reserve diversification; on the other hand, rising geopolitical risks that further accelerate the demand to diversify risk away from dollar-denominated assets,” as reported by Sina News.

The de-dollarization trend gained momentum following the 2022 freezing of approximately $300 billion in Russian foreign reserves, which demonstrated that dollar-denominated assets held in Western custodians can be frozen by executive action. Gold held in domestic custody cannot be seized remotely. According to China Economic Net, the European Central Bank reported that gold’s share of global official reserve assets reached 27% by end-2025, surpassing US Treasuries to become the largest official reserve asset.

Gold’s Structural Floor

Chen Yanbing, Senior Strategy Analyst at China Asset Management, noted that central bank gold purchases are a “slow variable” reflected in gold prices — they won’t immediately push prices higher, but they support the pricing center in the medium-to-long term, as Wall Street CN reported.

This structural demand provides a floor beneath gold prices. The WGC’s Q2 data shows central banks bought record amounts even as prices fell sharply — demonstrating price-inelastic, strategic demand. As TFTC noted, “Price-inelastic demand at that scale is structural reserve-building.”

Broader Market Picture

Total gold demand, including over-the-counter transactions, held steady year-over-year at 1,269 tonnes in Q2, while first-half demand reached 2,522 tonnes (+2% y/y) with a record value of US$380 billion. The LBMA gold price averaged US$4,506.29/oz in Q2 — 8% lower than Q1’s record but 37% higher than Q2 2025.

Gold ETFs saw net outflows of 45 tonnes, mainly from North America, as investors adjusted to higher inflation and interest rate expectations. Jewellery demand fell to 278 tonnes, its lowest since the pandemic, down 17% year-over-year — though jewellery spending rose 14% in dollar terms to US$40 billion, reflecting a “volume down, value up” pattern as consumers shifted toward lighter-weight products.

Technology gold use rose 2% to 80 tonnes, driven by AI-related demand in electronics, which grew 4%. However, as IndexBox noted, technology gold use accounts for only 5-6% of total global gold demand and plays only a marginal support role for gold prices.

What It Means for Investors

The 62% surge in central bank purchases carries several implications. First, it signals that central banks view gold as an essential hedge against geopolitical risk and fiat currency uncertainty, regardless of short-term price movements. Second, it confirms that reserve diversification away from dollar-denominated assets is a structural, multi-year trend rather than a tactical response to market conditions.

For China specifically, the PBoC’s 20-month consecutive buying streak and 33-tonne Q2 purchase represent the most significant signal from the report. At 2,346 tonnes — only about 8% of reserves, compared to 70%+ ratios common among Western European central banks — China has enormous headroom to continue accumulating. As GoldSilver.com observed, “The question is not what 289 tonnes does to gold’s price next week. It is what happens when the largest quarterly central bank buy on record meets a recovering market.”

Looking Ahead

The WGC expects investment to remain the primary driver of demand growth through H2 2026, supported increasingly by OTC activity and Asian buying. Central banks remain on course for another strong year, although likely lower than 2025. The falsifiable test will be Q3 2026 data: if central bank purchases fall back toward Q1 levels and USD reserve share recovers meaningfully, the de-dollarization thesis would stall. For now, however, the record Q2 buying sends an unambiguous signal that the world’s reserve managers are voting with their balance sheets — and gold is the beneficiary.