Analysts Lina Thomas and Daan Struyven anticipate that central banks will maintain a monthly purchase average of 50 tonnes throughout 2026, a sharp increase from the 17-tonne average seen prior to 2022. Sovereign demand reached 100 tonnes in June alone, with the People’s Bank of China emerging as the most significant buyer. This accumulation serves as a hedge against mounting geopolitical tensions and concerns regarding Western fiscal sustainability.

Beyond sovereign reserves, the market is finding support as expectations for Federal Reserve rate hikes subside. With inflation trends moderating, the pressure on gold is expected to ease, potentially pushing private investor participation higher. However, the rally is increasingly tethered to the mechanics of the derivatives market. Investors are heavily utilizing gold call options to hedge against policy shifts, forcing dealers to buy the underlying metal to cover their short exposure. This hedging activity effectively accelerates price surges but creates a precarious environment where any downturn could force rapid liquidation, amplifying price swings in both directions.