Central banks added 289 tons of gold in Q2, up 62% YoY

Global central banks added a net 289 tons of gold in the second quarter, up 62% from a year earlier, as buying accelerated across multiple countries, the World Gold Council said Thursday.

"Central bank demand remains structurally elevated, with 45% of respondents in our annual survey intending to increase reserves over the next 12 months," said Fan Shaokai, head of Asia-Pacific (ex-China) and global head of central banks at the World Gold Council.

India's gold demand fell 6% to 131 tons in the June quarter, with jewelry consumption dropping 15% to 75 tons, the second-lowest second quarter since 2000, while bar and coin demand rose 9% to 50 tons. Gold traded at about $4,047 an ounce, down 26% from a record $5,500 in January, as investors sold to raise liquidity during the Middle East conflict. Global bar and coin investment retreated 3% to 307.1 tons, while gold-backed ETF holdings fell 45 tons during the quarter, concentrated in a 74-ton June selloff. In value terms, India's gold demand rose 50% to 1.98 trillion rupees, reflecting the 59% year-over-year increase in local gold prices to 151,000 rupees per 10 grams.

The divergence between sovereign and consumer demand is widening. While central banks bought at the strongest second-quarter pace in the data series, jewelry demand globally slumped 17% to 278 tons as elevated prices pushed buyers toward lighter-weight products or investment alternatives. Technology-sector gold consumption rose to 80 tons, driven by artificial intelligence-related demand for components, partially offsetting weakness in consumer electronics. In Southeast Asia, Indonesia's investment demand jumped 40% to 14.5 tons on currency weakness and domestic economic concerns, while Thailand's bar and coin demand rose 10% to 10.9 tons, the strongest second quarter since 2019. Singapore posted a 6% gain to 2.3 tons, and Malaysia rose 28% to 2.5 tons. Vietnam bucked the regional trend, with demand falling 31% to 6.5 tons on constrained import quotas that kept local premiums elevated.

On the supply side, India's gold supply fell to a six-year low of 120 tons, with net bullion imports declining 22% to 98 tons and recycling volumes dropping 17% to 19 tons as consumers preferred gold loans over liquidation. The Reserve Bank of India held its gold reserves steady at 880 tons since mid-2025, though gold's share of total reserves rose to 16% from 12% on the 70% price increase. Jeweler inventories in India reached 21 tons in the quarter, well above the 13-year average of 15 tons, as steady store expansion met falling demand.

Louise Street, senior markets analyst at the World Gold Council, said bullion investment is likely to drive growth in the second half, though the demand mix could shift toward Asian investors and over-the-counter activity rather than Western ETF flows. The next catalyst for gold prices will be the U.S. Federal Reserve's September meeting, with markets pricing the trajectory of interest rates that influence gold's opportunity cost.

This article is for informational purposes only and does not constitute investment advice.