Gold’s Rally May Not Be Over Yet; Central Banks Are Still Buying Aggressively

Global central banks are expected to accelerate gold buying through the rest of 2026, providing the support needed for prices to claw back from recent losses, Bloomberg reported citing a Goldman Sachs analysis by Lina Thomas and Daan Struyven.

The analysts forecast that central bank purchases will average around 60 tonnes a month this year, up from a revised 12-month moving average of 50 tonnes recorded in March — itself a significant upgrade from the previous estimate of 29 tonnes. The firm said an in-house survey pointed to "strong underlying interest in gold", with recent geopolitical developments likely to push more institutions towards diversifying their reserves.

Gold has had a difficult run of late. Prices are trading near $4,530 per troy ounce on Monday, well off the record high of just under $5,600 hit in late January. Elevated energy costs have kept inflation sticky worldwide, leaving central banks reluctant to ease monetary policy. Bond markets have sold off in kind, weighing on gold — an asset that generates no yield of its own.

Bullish But Caution Persists

Despite the headwinds, Goldman maintained its year-end price target of $5,400 an ounce, a view echoed in recent months by UBS and ANZ. The optimism rests largely on the expectation that official sector demand will pick up meaningfully as the year progresses.

The World Gold Council offered some encouragement on that front, estimating central bank purchases at 244 tonnes in the first quarter of 2025, up from 208 tonnes in the preceding three months.

That said, Goldman struck a cautious note on the near term. Gold tends to act as a ready source of liquidity when private investors are squeezed — particularly during equity market sell-offs triggered by higher interest rates and softening growth. That dynamic could keep a lid on prices in the short run, even as longer-term demand builds.

Goldman also updated its methodology for tracking central bank buying, having previously relied in part on flows recorded in UK trade data. The bank said those figures may no longer fully capture shifts in official sector activity — hence the revision to its estimates.

India’s Gold Reserve

As of May 18, 2026, India’s gold reserve position remains historically strong, with the RBI holding around 880.52 metric tonnes of gold as of end-March 2026. A major shift is not just the size of the reserves, but where the gold is stored: about 77.23%, or 680.05 tonnes, is now held domestically, up sharply from 59.2% a year earlier and around 38% in March 2023.

By the week ended May 8, 2026, India’s overall forex reserves stood at $696.99 billion, while the value of gold reserves rose to $120.85 billion, helped by the sharp rally in global gold prices.