(Kitco News) - While speculators and retail investors have been liquidating their gold holdings, one major pillar of support remains firmly in place, with central banks viewing the current price action as a buying opportunity.
The National Bank of Poland (NBP) has been one of the most active buyers in the gold market, and on Thursday, Governor Adam Glapiński clearly outlined the bank's strategy.
“We’ve been consistently buying gold, taking advantage of the recent price drops,” Glapiński said at a press conference.
He added that the NBP has purchased 82 tonnes of gold so far this year.
In a social media post, Krishan Gopaul, Senior Analyst for EMEA at the World Gold Council, estimated that, based on current reserve data, Poland bought about 19 tonnes of gold last month.
Poland has remained a consistent gold buyer as prices have fallen nearly 30% from their record highs in late January. In June, the precious metal posted its biggest monthly decline since 2008 during the Global Financial Crisis.
Last month, gold fell 11.74% after the Federal Reserve, with Kevin Warsh now at the helm, signaled that monetary policy could tighten further before the end of the year.
Rising inflation pressures stemming from the global energy crisis, fueled by the war with Iran, have pushed real bond yields higher, increasing the opportunity cost of holding the non-yielding precious metal.
However, in recent weeks, central bank sentiment has shown that gold's role as a portfolio diversification tool continues to outweigh rising opportunity costs.
“This isn’t some kind of race or a purchase made merely for the sake of it,” Glapiński said. “There is a deep sense in the state’s role in ensuring the security of Poland and Poles under all circumstances, including wartime, which of course we’re not expecting.”
Poland has emerged as a clear leader among central banks after increasing its gold reserves by more than 100 tonnes last year, and it is on pace to achieve a similar target this year.
Glapiński also reaffirmed the NBP's goal of accumulating 700 tonnes of gold. The central bank currently holds 632.4 tonnes, with roughly 100 tonnes stored in Poland. The remainder of its reserves are held in London and New York, he said.
Last month, two major central bank surveys underscored persistent support for gold over the next 12 months. Surveys conducted by the World Gold Council (WGC) and the Official Monetary and Financial Institutions Forum (OMFIF) showed that central banks remain very positive about acquiring gold despite the recent record-high prices. According to the WGC, a record 45% of central banks plan to increase their gold holdings over the next 12 months, while nearly 90% expect global official gold reserves to continue growing.
At the same time, more than 60% of reserve managers surveyed by OMFIF expect gold prices to trade between $5,000 and $6,000 an ounce over the next year.
Analysts have said that although gold prices have fallen sharply during the months-long correction, persistent central bank demand appears to be creating a floor around $4,000 an ounce.
In an interview with Kitco News, Nawojka Wachowiak, Senior Portfolio Manager at Ninepoint Partners, said that gold's role in reserve portfolios is expanding, and that it has become a foundational safe-haven asset in a shifting global economy.
"If you have a buyer of that magnitude that steps in on pullbacks, you are going to find a floor,” she said.
