Some central banks initiate "tactical" gold sales

Some central banks have begun “tactical” gold sell-offs.

Data released by the Central Bank of Türkiye on April 2 show that, to cope with energy shortages triggered by the Middle East conflict and pressure from depreciation of the local currency, the country rapidly sold nearly 120 tons of gold in the two weeks up to March 28. The Central Bank of Poland also put forward a plan in early March to sell part of its gold reserves to raise about $13 billion in defense spending. In addition, according to statistics from the World Gold Council, the Russian central bank has cumulatively sold 15 tons of gold in the first two months of this year.

With multi-country central banks shifting their gold-buying strategies, it has also disrupted some institutions’ plans to buy the dip. The new round of long-versus-short power struggles has continued. London spot gold prices fell from $5,200 per ounce all the way down; on March 23, they briefly dropped to $4,098 per ounce, for a month-to-date decline of 11.5%. After that, the market rebounded somewhat. As of April 6, both gold futures and spot prices have broken above $4,700 per ounce.

That said, the current reduction of gold by a small number of central banks is still “tactical” and “temporary,” and has not yet formed a systemic trend. A macro research report from Lianhe Securities Minsheng Research & Consulting points out that the sell-offs by central banks such as those in Türkiye, Poland, and Russia are more driven by “following the trend” and “temporarily easing a fiscal crisis,” and do not affect the long-term logic that pushes up gold prices—namely, the weakening of dollar credit and increased central bank gold buying.

However, what needs to be kept in mind is the risk that if the Strait of Hormuz is closed off in the long term and oil prices remain at high levels, it could trigger a chain reaction of gold sell-offs. “Those economies with high dependence on crude oil, tight foreign-exchange reserves, and a high share of gold reserves will become potential high-risk zones for sell-offs.” A trading professional told a reporter from First Financial Daily.

Gold-buying power forced to sell

According to data released by the Central Bank of Türkiye, in the week ending March 28, the country’s gold reserves decreased by 69.1 tons, and in the past two weeks cumulatively declined by 118.4 tons. As a result, Türkiye’s total gold reserves fell to 702.5 tons. Of that, more than half was completed through gold-to-foreign-exchange swap transactions—using gold as collateral to obtain dollar liquidity, and then redeeming it upon maturity.

The Central Bank of Türkiye said that using gold transactions to reduce the economic impact of the Türkiye-U.S.-Iran conflict is largely about the gold foreign-exchange tenor, meaning that upon maturity, this portion of gold will return to the central bank’s reserves again.

Lianhe Securities Minsheng macro research notes that the oil-price supply shock has led to a further worsening of current account imbalances. The Türkiye lira has accelerated its depreciation, forcing the country’s central bank to sell gold to secure foreign-exchange liquidity. The “seesaw effect” between foreign-exchange reserves and gold reserves is currently unfolding.

Since the outbreak of the Türkiye-U.S.-Iran conflict, the U.S. dollar index has surged. The Türkiye lira against the U.S. dollar has repeatedly set historical lows, briefly falling to 44.35:1, as overseas capital sharply withdrew from equity and bond markets. At the same time, Türkiye imports about 90% of its crude oil; once oil prices broke above $100 per barrel, energy costs increased sharply.

By March 30, Türkiye had cumulatively used $44.3 billion of foreign-exchange reserves to stabilize the lira exchange rate, causing its gold net reserves to fall significantly. In the week of March 20, the country’s total international reserves were $177.45 billion; after swap adjustments, net reserves fell to $43 billion, indicating that the authorities are still continuously intervening in the foreign-exchange market.

This large-scale gold sell-off also stands in sharp contrast to its active gold buying over the prior four years. In 2022–2025, the Central Bank of Türkiye cumulatively added 325 tons of gold, bringing its gold reserves to 603 tons by the end of 2025, with an estimated value of about $135B.

The Central Bank of Russia began selling gold earlier this year, in January. According to World Gold Council statistics, in January 2026 the Russian central bank sold 9 tons of gold, becoming the largest net seller of gold for that month. In February, it continued to post net sales of 6 tons.

The strategy wavering of Poland’s central bank—another major gold buyer—is also striking. On March 4, the Central Bank of Poland proposed selling part of about 550 tons of gold reserves to raise funds of up to 48 billion zlotys (Poland’s official currency, about $13 billion) to support defense construction.

But less than two months earlier, on January 20, the Central Bank of Poland had just announced that, for “national security reasons,” it had approved a new gold purchase plan of as much as 150 tons. The goal was to bring total gold reserves to 700 tons, putting it among the top ten central banks with the most gold reserves in the world. A World Gold Council report shows that the Central Bank of Poland drove most of its gold-buying activity in February, buying 20 tons, bringing its total gold reserves to 570 tons, and increasing the proportion of total reserves to 31%.

The accumulation trend has not reversed

Over the past four years, central banks around the world have been key buyers in the gold market.

World Gold Council data show that in 2022–2024, global central banks’ average annual gold purchases for three consecutive years exceeded 1,000 tons, about double the average annual purchases in the prior decade. Even in 2025, when gold prices hit new highs, global central bank gold purchases still reached 863 tons—about 17.3% of global gold demand that year.

Although some central banks have recently started reducing holdings, they have not yet changed the overall gold accumulation pattern. The February central bank gold-buying monthly report released by the World Gold Council on April 2, 2026 shows that central banks around the world net bought 19 tons of gold that month, below the monthly average of 26 tons reported in 2025, but up from January’s net purchases of 5 tons.

Some central banks’ gold-buying pace has not stopped. Among them, the Czech Republic has maintained net purchases for 36 consecutive months; China has also increased holdings for 16 consecutive months. From November 2024 to February 2026, it cumulatively bought 44 tons; Uzbekistan has maintained net purchases for 5 consecutive months.

In a research report released on April 2, UBS strategist Joni Teves judged that it is extremely unlikely that central banks would make a structural shift or carry out large-scale gold sell-offs. The report expects that total gold purchases in all of 2026 will be about 800 to 850 tons, slightly lower than 2025’s level, more like “slowing down” rather than a trend reversal.

Hu Jie, a professor at the Shanghai Advanced Finance Institute of Shanghai Jiao Tong University and a former senior economist at the U.S. Federal Reserve, believes that for some countries, obtaining foreign-exchange gains through gold trading operations can be one of the policy considerations. Against the backdrop of elevated gold prices, some appropriate de-risking/deleveraging can be seen as a technical adjustment based on market volatility.

Hedge funds cut early

Some central banks have shifted from being “big buyers” to “big sellers,” directly impacting the gold market.

Throughout March, COMEX gold futures prices cumulatively fell by more than 11%, with the front-month contract hitting a low of 4,100 per ounce. Data from the U.S. Commodity Futures Trading Commission (CFTC) show that for the week ending March 24, asset management institutions led by Wall Street hedge funds reduced their net long positions in gold futures options by 1.3144 million ounces, setting the largest single-week reduction record for that month.

The signal from investors exiting is also clear. Since March 2, when gold prices surged and then pulled back in a short-term rebound, the holdings of major global gold ETFs have continued to shrink. Between March 2 and March 26, four major gold ETFs—including SPDR, iShares, PHAU, and SGBS—collectively reduced holdings by more than 75 tons. Heightened market volatility weakened the holding experience, prompting investors to take profits and redeem, creating a synchronized reaction with institutional de-risking.

The trading sources analyzed for a reporter from First Financial Daily that Wall Street hedge funds believe gold prices are facing a double squeeze: first, pressure from cooling rate-cut expectations for the Federal Reserve and from a stronger U.S. dollar; second, gold sell-offs by central banks in multiple countries, which cause them to lose critical buyer support.

Deeper concern lies in the potential chain reaction. The source further noted that if high oil prices driven by the Middle East conflict persist, more crude-oil-importing countries may be forced to sell gold to obtain foreign exchange in order to stabilize their local currency and purchase energy. Those economies with high crude-oil dependence, tight foreign-exchange reserves, and a high proportion of gold reserves will become potential high-risk zones for sell-offs. If more emerging market countries follow Türkiye’s example and treat gold as the last source of liquidity, market supply pressure will surge sharply.

However, China International Capital Corporation (CICC) believes the risk of the Türkiye model spreading to Gulf countries is limited. Geopolitical and strategic security demands have not shaken the long-term support for central banks’ gold purchases.

As of April 6, COMEX gold futures’ front-month contract had rebounded to above $4,700 per ounce. But there is disagreement among institutional viewpoints on whether gold prices can quickly recover the ground lost in March.

UBS expects a gold price target of $5,400 per ounce by the end of 2026, but points out that the key variable is the situation in the Middle East: if the conflict causes long-term damage to energy infrastructure, gold prices may face longer periods of consolidation and downside pressure; by contrast, if energy costs fall rapidly, central banks’ willingness to buy gold would only then have a chance to reignite.

In its research report, CICC also stated that regardless of whether a downgrade in the geopolitical situation drives a pullback in oil prices, whether monetary policy returns to easing, or whether supply shocks worsen the pressure for economic recession—thereby triggering gold’s safe-haven attributes—there is upward room for both investment demand for gold and gold prices to recover.