Despite the continuous increase in gold holdings by global central banks, its driving effect on the rise in gold prices is quietly weakening.
On July 4th, the World Gold Council released the latest data showing that global central banks net purchased 20 tons of gold in May.
On July 7th, the State Administration of Foreign Exchange of China released data showing that as of the end of June, China’s official gold reserves stood at 73.9 million ounces, an increase of 70,000 ounces compared with May.
However, the global gold price remained “unmoved” and continued its downward trend. Before the US government introduced new reciprocal tariff measures against multiple countries in the early hours of July 8th, the spot price of gold in London once dropped below $3,300 per ounce, down about $200 from the historical high in late April.
In April, global central banks’ gold purchases decreased by 12% compared to March. In May, the purchase volume was 27 tons lower than the average of the past 12 months. This made Wall Street realize that the intensity of global central banks’ gold purchases has declined since the second quarter, making it difficult to support the rebound in gold prices. As a result, many hedge funds that closely track the trends of global central banks’ gold purchases have taken profits on gold. Zhang Gang, a Wall Street hedge fund manager who has long been involved in COMEX gold futures investment, analyzed to the reporter.
Data released by the U.S. Commodity Futures Trading Commission shows that as of the week ending June 24, the net long position of COMEX gold futures options held by asset management institutions, mainly hedge funds, decreased by 614,200 ounces compared with the previous week, marking the largest short selling intensity since June.
Wang Xinjie, chief investment strategist of Standard Chartered China, told our reporter in an interview on July 8 that recently, the global gold market has witnessed a situation where “large buyers from central banks have seen a decline in their gold purchases, while small and medium-sized buyers such as hedge funds have taken profits and left the market at high prices.” However, as the United States restarts the reciprocal tariff trade war and the “Big and Beautiful” act of the United States continues to cause the scale of the US debt to rise rapidly, global central banks will still increase their gold purchases in the future as an important tool to hedge against financial market risks and “de-dollarization”.
Standard Chartered Bank data shows that since the beginning of this year, gold has increasingly become a more attractive “de-dollarization” hedging tool. For instance, from 2025 to the present, the correlations between gold and the US dollar index, as well as the S&P 500 index and US Treasuries, have reached -0.59, -0.07, and -0.51 respectively, indicating that when the prices of US dollar assets fall, the price of gold tends to rise.
Zhang Gang disclosed to reporters that although the global central bank’s gold purchase intensity has weakened recently, most investment institutions on Wall Street still believe that the total scale of global central bank gold purchases will continue to exceed 1,000 tons this year. Once the global central bank’s gold purchase intensity increases in the second half of the year, they will quickly follow the global central bank to “pan for gold” and take advantage of the rise in gold prices.
Standard Chartered Bank believes that the gold price is expected to reach $3,400 per ounce in the next three months, and the estimated gold price for the next 12 months remains at $3,500 per ounce.
