Source: J.P. Morgan Commodities Research

Are central banks still buying gold?

One of the strongest factors that had been driving both the medium- and long-term bull case for gold was central bank buying around the globe. From 2021 to 2025, central bank gold purchases averaged 225 tons per quarter — roughly double the pace from 2016 to 2020.

As 2026 has progressed, that pace appears to have cooled — at least on the surface. Central banks sold 129 tons of gold in the first quarter of the year, headlined by Türkiye’s sale of 60 tons in March. Meanwhile, net reported purchases of gold amounted to only 16 tons in the first quarter of 2026, representing a sharp drop in momentum.

That said, a certain amount of central bank purchases go “unreported,” according to the World Gold Council, due to the fact that there’s no mandatory rule on reporting purchases to the IMF. Consequently, how much gold has been purchased but not reported remains a mystery.

However, using alternative data from the London over-the-counter (OTC) market and observing trade flows from Swiss refineries, the World Gold Council estimates that the amount of gold purchased in the first quarter of 2026 actually increased over the fourth quarter of 2025 (244 tons in the former, up from 208 tons in the latter). 

Who is making all these unreported purchases? At least one buyer appears to be China. “Chinese net imports of gold have inflected higher, coming in at 317 tons in the first quarter of 2026, up by nearly three times compared to the previous quarter,” said Shearer. “Furthermore, the People’s Bank of China has ramped up its reported purchases, from around a one-ton-per-month pace for the six months through February to five tons in March and eight tons in April.”

The motivation behind these purchases is likely strategic. The freezing of Russian central bank assets in 2022 signaled that U.S. dollar assets held offshore are not unconditionally safe from U.S. sanctions. In response, China appears to be systematically building gold reserves as part of a long-term project to establish the renminbi as a credible reserve currency alternative. 

In addition to central banks, there are other sources of demand that may set a stronger price floor for gold — and a potentially higher ceiling. In early 2025, China's top 10 insurance companies received regulatory approval to allocate up to 1% of their assets under management (AUM) to physical gold. At that time, 1% of combined AUM amounted to around 200 tons of gold.

Industry watchers believe the 1% cap could just be a starting point, and that something closer to a 5% allocation could be in the cards. Furthermore, as these companies begin disclosing their holdings (something they are currently not required to do), the market might be caught by surprise.

All that glitters: The bear case for gold’s future

Gold serves as a debasement hedge — a form of protection against the loss of a currency’s purchasing power due to inflation or currency debasement. But because it has no real yield, it tends to perform poorly in markets where the yield on assets (like U.S. Treasuries or money market funds) is set to go up.

As a result, Fed policy could significantly shape the trajectory of gold prices. “The most significant bearish risk to our view is a macro scenario where U.S. growth and employment remain buoyant but inflation continues to accelerate, solidifying a Fed hiking cycle this year,” said Shearer. “A Fed that feels emboldened by stronger employment momentum and crystallizes behind a need to fight higher for longer inflation could begin to crack investor demand.”

Shearer added that he still thinks this is “a high bar” for the year. ”If it occurs, we would likely see a flip to more sustained Western ETF outflows, raising a persistent headwind for gold prices, particularly amid a dip in central bank buying intensity.”