Central banks are voting for gold with their balance sheets

(Kitco News) - Actions speak louder than words. That old cliché should be one of the defining themes in the gold market through the second half of the year.

Last month, two central bank surveys delivered an unmistakable message. The World Gold Council found that a record 45% of central banks expect to increase their own gold reserves over the next 12 months, while OMFIF's annual survey showed that reserve managers continue to rank gold among their preferred reserve assets as they diversify portfolios in an increasingly fragmented global financial system.

Surveys, however, only tell us what policymakers intend to do. What has happened since then has added considerably more weight to that sentiment.

The latest reserve data show that central banks aren't merely expressing confidence in gold—they are acting on their convictions.

The World Gold Council reported that central banks added a net 41 tonnes of gold to official reserves in May, continuing what has become a multi-year trend of robust sovereign demand. Then, as gold prices extended their correction in June, some of the market's largest official buyers became even more active.

China's central bank increased its reserves by another 15 tonnes, marking its 20th consecutive month of purchases and its largest monthly addition this year. 

Poland has been even more aggressive. The National Bank of Poland has accumulated 82 tonnes during the first half of 2026, with Governor Adam Glapiński openly acknowledging that the central bank has been taking advantage of lower prices to build its reserves.

That point deserves more attention because it stands in sharp contrast to sentiment among retail investors. Speculative traders have left the gold market in search of momentum in AI stocks, while investors have liquidated their holdings as opportunity costs have risen.

But at what point do investors start following the path that central banks are laying out?

Central banks are not buying gold because they expect next month's inflation report to surprise to the upside or because they believe the Federal Reserve is about to cut interest rates. They are not attempting to trade momentum.

They are making long-term monetary decisions.

Reserve managers measure risk in decades, not quarters. They are building balance sheets designed to withstand geopolitical shocks, currency volatility, and a global financial system that is becoming increasingly multipolar. Gold's appeal lies in its monetary characteristics: it is liquid, universally accepted, free of counterparty risk, and independent of any single government's fiscal or monetary policy.

That is why recent price weakness has failed to discourage official-sector demand. In fact, lower prices have simply provided central banks with a more attractive entry point.

Investors should take note.

That’s it for this week. Have a great weekend.