Gold’s Central Bank Engine Loses Steam Even as Bullion’s Longer-Term Bull Case Stays Intact

The narrative surrounding gold has long rested on two pillars: the Federal Reserve’s interest-rate trajectory and the relentless accumulation by the world’s central banks. Lately, the second pillar has started to show hairline cracks, even as the metal’s broader uptrend remains remarkably resilient.

Fresh data from the World Gold Council reveals that central bank purchases totaled roughly 130 tonnes through September of this year—a noticeable deceleration from the approximately 160 tonnes amassed during the same stretch in the prior year. The pullback is all the more striking given how robust the second quarter proved to be: central banks added a net 288.9 tonnes during that period, a 62.4 percent jump year-over-year and more than five times the 56.5 tonnes accumulated in the first quarter.

That sharp quarterly surge makes the subsequent slowdown feel almost like a whiplash reversal. Yet the underlying appetite appears far from extinguished. A World Gold Council survey of 74 central banks conducted in June found that 45 percent of institutions planned further gold purchases—the highest share recorded since the survey began in 2018. The gap between that stated intent and the actual pace of buying suggests institutions may be taking a tactical breather after the metal’s dramatic price appreciation, rather than abandoning their long-term diversification strategies.

China and Poland have been among the most active buyers, adding 20 tonnes and 8 tonnes respectively since the start of the year. In May, Poland reported a particularly hefty 18-tonne purchase, with Uzbekistan and Kazakhstan also posting double-digit acquisitions during the same month.

The Fed’s Shadow Looms Large

While central bank demand sets the medium-term foundation, short-term price action remains hostage to expectations about US monetary policy. Gold closed Friday at $4,430.09 per ounce, down 1.0 percent on the day. The trigger: a surprisingly robust US jobs report that shifted rate expectations and made the yield-bearing dollar more attractive relative to bullion.

The weekly decline of 0.5 percent is modest, and the metal still shows a 4.3 percent gain over the past 30 days. Its year-to-date performance of 25 percent underscores that the broader upward trajectory remains intact. Even the distance from the 200-day moving average sits at a moderate -2.2 percent—hardly the stuff of a trend reversal.

Still, the gap from January’s record high of $5,598.58 is now a substantial 21 percent, a reminder of just how far the metal has retreated from its peak. With the Fed oscillating between hawkish signals and dovish undertones, analysts expect gold to remain rangebound in the weeks ahead. Attention now turns to upcoming US producer price data, which could once again reshape the rate calculus.

A Supply Picture That Offers Little Drama

On the supply side, conditions remain notably stable. Global mine production reached 3,671.6 tonnes in 2025, a 0.6 percent increase year-over-year, according to the World Gold Council. South Africa reported a June production gain of 6.2 percent on an annual basis. There are no signs of supply disruptions or labor strikes that could tighten the market.

Should investors sell immediately? Or is it worth buying Gold?

The Broader Commodity Canvas

Gold’s predicament is hardly unique—it sits within a commodity landscape where each sector is marching to its own drummer. Energy markets, for instance, are being driven by an entirely different set of forces. Brent crude closed Friday nearly flat at $95.83 per barrel after its strongest weekly rally since July, posting an 8.5 percent gain over seven days and 21 percent over 30 days. The Iran conflict has reintroduced a hefty geopolitical risk premium, with the Strait of Hormuz effectively considered closed and no formal ceasefire in sight. Compounding the situation, several million barrels per day of global refining capacity remain offline, squeezing middle distillate supplies and pushing diesel margins to record levels.

West Texas Intermediate followed a similar script, closing at $91.22 per barrel with a 9.3 percent weekly gain. US strikes on Iranian targets resumed this week for the first time in about a month, reviving concerns about potential supply interruptions, while weekly inventory data showed a notable drawdown in crude stockpiles.

Silver, gold’s precious-metal cousin, felt the rate pressure even more acutely, slipping 1.1 percent on Friday to $66.82 per ounce. Its year-to-date performance of 61 percent remains impressive, though the metal now sits 5.4 percent below its January level and 10 percent beneath its 200-day average. The market’s structural tightness persists—supply deficits have run uninterrupted since 2021, with a sixth consecutive deficit year anticipated, and COMEX inventories have fallen dramatically since 2020.

Coffee’s Isolated Collapse

Perhaps the most dramatic mover of the week was coffee, which plunged 9.7 percent on Friday to close at 292.90 US cents per pound. The weekly decline stands at 6.3 percent, with a 10 percent drop over the past month. The culprit is Brazil: the 2026/27 harvest was already 97 percent complete by late August, with arabica at 96 percent, pointing toward a potentially record crop and a very comfortable global balance sheet for the coming season.

Yet not all signals point lower. ICE-monitored arabica inventories have fallen to their lowest level in 27 years, and a strong El Niño event could disrupt the critical flowering phase in September and October. With a relative strength index of 36.8, coffee is approaching oversold territory—a hint that the downward momentum may be losing steam.

What to Watch

For gold investors, the immediate question is whether the central bank slowdown represents a pause or a pivot. The June survey’s record-high buying intentions suggest the former, but official data will provide the definitive answer. Should the upcoming producer price figures come in moderate, gold could find fresh footing; a September rate hike is already largely priced into markets.

The interplay between diminishing—yet structurally positive—central bank interest and a Fed caught between tightening signals and dovish asides is likely to keep gold confined to a broad trading range in the near term. The metal’s fundamental support remains intact, but the path forward will depend on whether official central bank numbers catch up to the intentions voiced in surveys.