Gold Prices Pressured by Tight Monetary Policy, Indonesian Demand Surges

International gold prices are moving weakly and consolidating due to tight monetary policies from global central banks. However, domestic demand for gold bullion in Indonesia has surged sharply. Spot gold prices are under pressure, trading near the $4,000 per troy ounce level. On Tuesday (4/8/2026), the global gold price opened at $4,054 per troy ounce. The spot price has weakened by nearly 2 per cent over the past month and around 6 per cent since the start of the year.

Analysts, including the World Gold Council, indicate that the weak global price movement is influenced by central banks in the United States, Japan, and the United Kingdom maintaining tight monetary policies. The US Federal Reserve’s decision to hold its benchmark interest rate steady, coupled with hawkish rhetoric, has strengthened the US Dollar Index (DXY) past the 101 level and pushed up US Treasury yields. This environment triggered a capital outflow of 45 tonnes from physical gold-backed ETFs globally during the second quarter of 2026. Analysts at TradingKey noted that if global gold prices test the support area around $4,023 per troy ounce, they risk a deeper correction towards the psychological level of $4,000-$3,900.

Despite the global price correction, total gold demand in the first half of 2026 remained positive. The World Gold Council’s Gold Demand Trends Q2 2026 report recorded a 2 per cent year-on-year increase in global gold demand to 2,522 tonnes, valued at $380 billion. Central bank buying was a key pillar, with net purchases surging 62 per cent year-on-year in Q2 to 289 tonnes. A WGC survey indicates that 45 per cent of central banks plan to increase their gold reserves over the next 12 months.

In Indonesia, the market has shown remarkable resilience. Physical and digital gold demand soared by 40 per cent year-on-year in the second quarter of 2026, reaching 15 tonnes. This surge is driven by the weakening Rupiah against the US Dollar and growing public concern over economic prospects. Shaokai Fan, Head of Asia-Pacific (excluding China) and Global Head of Central Banks at the World Gold Council, stated that this demand reflects a shift in investor behaviour, with more Indonesians viewing gold as a strategic long-term asset rather than merely reacting to short-term price fluctuations.

In the jewellery sector, high gold prices continued to suppress purchasing volumes, with demand falling 10 per cent compared to the first half of 2025, marking thirteen consecutive quarters of decline. Consumers are increasingly shifting to jewellery with lower gold purity. Meanwhile, the government has officially launched a roadmap for the development and strengthening of the bullion business and ecosystem, aiming to establish a national bullion bank framework and expand public access to integrated gold investment products. The Indonesian Digital Gold Traders Association (PPEDI) also noted that digital gold literacy is improving, with the association coordinating with relevant institutions to ensure transaction security and a 1:1 ratio of physical gold backing for investor holdings.