Global gold prices have lost their shine in recent weeks. Gold prices\nfell more than 20% from their peak at the end of January 2026, when they\nreached around US$5,596 per troy ounce. Now, prices are hovering in the\nUS$4,400 range.<\/p>\n
According to Refinitiv, gold prices closed at US$4,492.48 per troy\nounce on Friday\u2019s trading (27\/3\/2026), up 2.6%. However, gold prices\nhave collapsed 15% since the war broke out on 28 February 2026.<\/p>\n
This correction is occurring amid conditions that would normally\nsupport gold, namely geopolitical conflict and global uncertainty.<\/p>\n
The factor that has changed is actually the market participants,\nparticularly central banks.<\/p>\n
Over the past three years, central banks have been the world\u2019s\nlargest gold buyers, absorbing nearly 1,000 tonnes per year since 2022.\nThis flow created a strong foundation for the upward gold trend. But\nsince the beginning of 2026, the direction has reversed. The market is\nnow facing supply from institutions that were previously the main\nsupporters.<\/p>\n
According to Bullion Vault, the mechanism began with a surge in\nenergy prices. Disruptions in oil trade routes pushed oil prices above\nUS$100 per barrel. Energy-importing countries need more dollars to pay\nfor these imports.<\/p>\n
This pressure led to the weakening of domestic currencies,\nparticularly in developing countries. In such situations, central banks\nface a quick choice: allow the currency to weaken or use reserves to\nhold it back.<\/p>\n
Gold becomes the most liquid instrument after the US dollar. When\nexchange rate pressures increase, gold is sold or used as collateral to\nobtain liquidity. This is what drives additional supply to the gold\nmarket in a short time, without considering prices.<\/p>\n
Turkey is the most striking example. According to Bloomberg, the\ncountry\u2019s central bank has released around 60 tonnes of gold since the\nIran conflict heated up, valued at about US$8 billion. This step was\ntaken to stem the continued weakening of the lira, which has hit record\nlows against the dollar. Some transactions were conducted through swap\nschemes using gold reserves stored at the Bank of England.<\/p>\n
Russia is acting with a different motive. Its central bank has begun\nselling gold since 2025 to finance war needs. The latest data shows\nRussia\u2019s gold reserves at their lowest level in four years, with sales\nvalue reaching around US$2.4 billion in early 2026. This adds consistent\nsupply-side pressure.<\/p>\n
Poland has not yet made direct sales, but policy signals are already\nmoving the market. According to statements from central bank officials,\nPoland is considering monetising gold reserves to fund defence spending,\nwith potential funds of around US$13 billion. The market is responding\nto this policy direction as potential additional supply, given that\nPoland was previously one of the largest gold buyers in recent\nyears.<\/p>\n
Central bank demand for gold is indeed starting to weaken. Its share\nfell below 25% of total global demand in 2025, from an average of around\n33% in the previous three years. Although still historically high, this\ndirectional change is enough to shift market balance.<\/p>\n
Selling pressure from central banks is price-insensitive. Sales are\nmade for liquidity and stability needs, not to seek the best timing. In\nsuch conditions, the market struggles to absorb additional supply,\nespecially when other investors are also liquidating, including from\ngold ETFs which recorded the largest outflows in more than two\nyears.<\/p>\n
Looking ahead, the direction of gold prices will be heavily\ndetermined by the same factors: currency pressures and energy\nprices.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/why-are-central-banks-around-the-world-selling-off-gold-in-droves-1774864371", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }