Authored by Andrew Moran via The Epoch Times,
Central banks continue to add to their gold reserves amid global inflation and geopolitical risks.
Total third-quarter central bank demand rose by 42 percent year over year to 321 tons, “eclipsing recent typical quarterly buying levels,” according to the World Gold Council, an industry body funded by major gold miners, which publishes widely cited quarterly data on global gold demand.
This was the highest quarterly total since the end of 2024 and firmly above the five-year quarterly average of 227 tons.
The People’s Bank of China led gold purchases, followed by the National Bank of Poland.
Year to date, global central banks and other official institutions have bought 675 tons of the precious metal, up 6 percent from the same period last year.
As a result, the organization lifted its 2026 central bank demand forecast. The group now projects that these institutions will at least match the 848 tons purchased last year.
A strong third quarter was driven by “portfolio diversification and risk management,” the report stated.
“Central Banks remained an important pillar of demand as pronounced buying continued from the official sector,” Louise Street, senior markets analyst at the World Gold Council, said in a Nov. 3 statement.
State of Gold Buying
Overall gold demand in the past quarter fell by 1 percent to 1,369 tons.
Bar-and-coin demand fell by 19 percent from a year ago to 268 tons, while jewelry demand declined by 17 percent. The group noted that retail investors were waiting for a “clearer price trend to emerge,” and gold prices averaged $4,262 per ounce.
Electronics and technology demand, meanwhile, ticked up by 5 percent and 3 percent year over year, respectively.
Physically backed gold exchange-traded funds (ETFs) reversed the second-quarter trend and attracted 211 tons of inflows. This brought holdings to an all-time high of 4,256 tons and generated a record $31 billion of quarterly inflows.
“The third quarter was a mixed bag for gold demand,” Street said.
“Gold ETF inflows came roaring back, with geopolitical risk and concerns around fiscal discipline driving institutional interest, in contrast to retail investors who held back amid uncertainty over the gold price outlook.”
On the supply side, total gold levels slipped by 1 percent to 1,369 tons. Mine production climbed by 3 percent to a third-quarter record of 1,071 tons, and recycling fell by 8 percent to 314 tons.
Looking ahead to the rest of the year, gold markets will face a balancing act.
On the one hand, increasing interest rates and a mixed inflation outlook could dampen the yellow metal.
Gold is sensitive to a rising-rate environment because it raises the opportunity cost of holding non-yielding bullion. Despite its role as an inflation hedge, surging consumer prices could force the Federal Reserve to keep hiking, strengthening the U.S. dollar and making dollar-denominated commodities more expensive for foreign investors.
On the other hand, geopolitical strife in the Middle East and Eastern Europe, along with stress in global financial markets, could weigh on precious metals.
Darkening Gold’s Glitter
After a strong start to 2026, gold has surrendered much of its earlier gains.
As of Nov. 3, gold traded below $4,000 on the COMEX division of the New York Mercantile Exchange, down sharply from a record intraday high of more than $5,600 in January.
In the near term, U.S. midterm election results could be an upside or downside catalyst for gold prices, according to Ross Maxwell, chief strategy officer at VT Markets.
“A divided Congress could provide a more supportive environment if reduced fiscal expansion expectations lead to lower yields and a weaker U.S. dollar,” Maxwell said in a note emailed to The Epoch Times.
“This could strengthen Gold’s outlook beyond temporary safe-haven demand surrounding Election Day.”
But stubborn inflation and a hawkish Federal Reserve could keep real yields elevated, potentially capping gold’s recovery, he said.
“A stronger bullish case would emerge if gold continues to make higher highs while real Treasury yields and the U.S. dollar decline,” he said.
