Central banks delivered a sharp rebound in Q2 2026, purchasing a net 289 tonnes of gold during the second quarter, representing a 62% increase from the same period last year. According to the World Gold Council's latest Gold Demand Trends report, this marks the highest quarterly level since Q1 2024, with central banks emerging as one of the largest sources of gold demand during the quarter. The recovery comes after a significant revision to Q1 official-sector buying estimates, which were reduced from 244 tonnes to just 56.5 tonnes following reassessment of unreported over-the-counter purchases. Suki Cooper, Global Head of Commodities Research at Standard Chartered, noted that while the lower first-quarter estimate trims the bank's full-year official-sector demand forecast by just over 100 tonnes, the revision better aligns with market expectations. The rebound represents growing two-way flows that are healthier for long-term gold price trends than surges in retail demand.
The Bank of Korea has resumed physical gold purchases after a 13-year hiatus, marking a significant shift in the country's monetary policy approach. According to reports from Korea Economic Daily, Seoul had stopped buying gold in 2013 following substantial losses from its previous purchases. The bank had acquired 90 tonnes between 2011 and 2013 at an average $1,629 per ounce, totaling approximately $4.7 billion. However, gold prices subsequently crashed from their September 2011 peak of $1,920.30 to $1,180.71 by June 2013, representing a 38.5% decline and making Korea's gold holdings worth 27.5% less than their purchase price. The timing of these purchases was particularly controversial, with lawmakers dragging in then-governor Kim Choong-soo over the decision, and by 2015 the paper loss reached about 1.8 trillion won. As reported by The Korea Times, Jung Hee-sub from the Reserve Management Group confirmed the bank has begun purchasing spot gold ETFs on a very small scale during the second quarter of 2026, providing additional exposure to gold as part of the bank's reserve management strategy.
The Bank of Korea has made its first domestic gold purchases in 13 years, marking a significant milestone in the country's monetary policy approach. According to The Chosunilbo reports, these purchases represent the central bank's return to active gold accumulation after a prolonged pause. The bank has established a mechanism to purchase domestically refined gold, allowing it to expand reserves without disrupting the local market. Most of South Korea's gold is recovered as a byproduct of copper, lead and zinc refining, with LS MnM and Korea Zinc producing an estimated 40 to 50 metric tons annually. The central bank is considering purchasing 4 to 5 metric tons each year from volumes that would otherwise be exported, using negotiated block transactions rather than exchange trading to minimize impact on domestic prices or demand. Additionally, the initiative allows transactions to be settled in Korean won instead of U.S. dollars, reducing pressure on foreign exchange reserves.
The Bank of Korea announced that it has resumed gold investment through exchange-traded funds (ETFs) and is coordinating with the Korea Exchange (KRX), the Korea Securities Depository (KSD), and domestic gold producers to develop a mechanism for purchasing physical gold at international market prices. According to Jeong Hee-seop, Managing Director of Foreign Exchange at the Bank of Korea, the expansion of gold reserves stems from the context of increased geopolitical risks, which continues to make gold a safe-haven asset. In addition, the price of gold has fallen from its peak earlier this year, contributing to more favorable conditions for buying. Analysts believe that the Bank of Korea's expansion of gold investment aligns with the trend of many central banks worldwide to diversify their reserve assets, increasing their resilience to geopolitical risks and fluctuations in international financial markets. The bank's current plan involves bidding for only 4-5 tonnes annually from Korea's domestic production, keeping the country's total reserves at approximately 104.4 tonnes.
Gold has witnessed one of its most volatile starts to a year in recent years, with the precious metal surging to record highs in January, climbing past $5,500 per ounce, before tumbling to $4,100 per ounce by August. The sharp correction came as renewed tensions over the Iran war sent oil prices soaring, fuelling expectations that the US Federal Reserve could raise interest rates later this year. Despite the pullback, gold remains up about 20% for the year, even though it now trades about 25% below its January peak. Market experts believe the recent correction could present a gradual accumulation opportunity for long-term investors, with many arguing that the precious metal may still be in the early stages of a broader bull market. Paulson, whose bet against subprime mortgages became one of the most profitable trades in Wall Street history, turned his attention to gold in 2009 and believes gold is becoming the most apt reserve currency in the world, replacing fiat currencies. However, the World Gold Council suggests that at current levels, gold prices are broadly aligned with a global backdrop of moderate growth, cooling but still elevated inflation, and expectations of further, but limited, central bank tightening.
