Will multiple central banks continue to sell off gold? The key variable depends on the situation in the Middle East.

Some central banks have started “tactical” gold sell-offs.

Data released by the Central Bank of Turkey on April 2 showed that, to cope with energy shortages triggered by the Middle East conflict and pressure from depreciation of the local currency, the country rapidly sold nearly 120 tons of gold over the two weeks through March 28. The Central Bank of Poland also proposed a plan in early March to sell part of its gold reserves to raise roughly $13 billion for defense spending. In addition, according to statistics from the World Gold Council, the Russian central bank sold a cumulative 15 tons of gold in the first two months of this year.

Central banks in multiple countries have shifted their gold-buying strategies, which has also disrupted some institutions’ plans to buy the dip. A new round of ongoing struggle between long and short forces continues. London spot gold prices fell continuously from $5,200 per ounce, reaching $4,098 per ounce at one point on March 23. The month-to-date cumulative decline was as much as 11.5%. After that, the market rebounded somewhat. As of April 6, both gold futures and spot prices broke above $4,700 per ounce.

However, the current reductions by a small number of central banks still fall into the category of “tactical” and “temporary” actions, and have not formed a systemic trend. Lianhe Securities Minsheng Macro Research noted that the sell-offs by central banks such as those of Turkey, Poland, and Russia are more driven by “following the trend” and the consideration of “temporarily easing a fiscal crisis,” and do not affect the long-term logic that supports higher gold prices—namely, “weakening dollar credit and increased central bank gold purchases.”

That said, it is necessary to stay alert to the possibility that, if the Strait of Hormuz is closed for the long term and oil prices remain at high levels, it could trigger a chain reaction of gold sell-offs. “Those economies with high dependence on crude oil, tight foreign reserves, and a high share of gold reserves will become potential high-risk zones for sell-offs,” a trading insider told the reporter from First Financial.

Central Bank of Turkey figures also show that, for the week ended March 28, the country’s gold reserves decreased by 69.1 tons, and over the past two weeks they fell by a cumulative 118.4 tons. As a result, Turkey’s total gold reserves fell to 702.5 tons. Of this, more than half was completed through gold-for-foreign-exchange swap transactions—using gold as collateral to obtain U.S. dollar liquidity, and then redeeming it when the contracts mature.

The Central Bank of Turkey said it uses gold trading to reduce the impact of the Turkey-U.S.-Israel-Iran conflict on the economy; much of the trading involves gold foreign-exchange tenors—when these expire, this portion of gold will return to the central bank’s reserves.

Lianhe Securities Minsheng Macro Research said that the oil-price supply shock has led to a worsening of current account imbalances, the Turkish lira has accelerated its depreciation, and this has forced the country’s central bank to sell gold to obtain foreign-exchange liquidity. The “seesaw effect” between foreign-exchange reserves and gold reserves is now playing out.

Since the outbreak of the Turkey-U.S.-Israel-Iran conflict, the U.S. dollar index has surged. The Turkish lira against the U.S. dollar has continued to hit record lows, falling to 44.35:1 at one point, and overseas capital has significantly pulled out of stock and bond markets. Meanwhile, Turkey imports about 90% of its crude oil; after oil prices broke above $100 per barrel, energy costs increased sharply.

By March 30, Turkey had used $44.3 billion of its foreign-exchange reserves to stabilize the lira exchange rate, leading to a significant decline in its net gold reserves. In the week ending March 20, the country’s total international reserves were $177.45 billion, and after adjustments for swaps, net reserves fell to $43 billion, indicating that authorities are still continuously intervening in the foreign-exchange market.

This large-scale gold sell-off also stands in stark contrast to its earlier active gold purchases over the past four years. From 2022 to 2025, the Central Bank of Turkey cumulatively added 325 tons of gold, bringing its gold reserves to 603 tons by the end of 2025, with an implied valuation of about $135B.

The Russian central bank, meanwhile, began selling gold as early as January this year. According to World Gold Council statistics, in January 2026 the Russian central bank sold 9 tons of gold, becoming the largest net seller of gold for that month; in February it continued net selling of 6 tons.

The strategy swings of Poland’s central bank—the large gold buyer—are also striking. On March 4, Poland’s central bank proposed raising up to 48 billion zlotys (Poland’s official currency, roughly equivalent to $13 billion) by selling part of assets from approximately 550 tons of its gold reserves, to support defense construction.

Yet less than two months earlier, on January 20, Poland’s central bank had just announced that, for “reasons of national security,” it had approved a new gold purchase plan as large as 150 tons, with the goal of increasing total gold reserves to 700 tons and ranking among the top ten central banks with the most gold reserves globally. The World Gold Council report shows that Poland’s central bank drove most of the gold-buying activities in February, buying 20 tons, bringing its total gold reserves to 570 tons; the proportion of gold reserves to total reserves rose to 31%.

The accumulation trend has not reversed

Over the past four years, central banks around the world have been key buyers in the gold market.

World Gold Council data show that from 2022 to 2024, global central banks’ average annual gold purchases exceeded 1,000 tons for three consecutive years—about double the average annual purchases over the previous decade. Even in 2025, when gold prices kept hitting new highs, global central bank gold purchases still reached 863 tons, accounting for about 17.3% of global gold demand that year.

Although some central banks have reduced holdings recently, they have not yet changed the overall gold-buying landscape. The February central bank gold-purchase monthly report published on April 2, 2026 by the World Gold Council shows that, in that month, central banks across countries made net purchases of 19 tons of gold, below the monthly average of 26 tons reported for 2025, but up from January’s net purchases of 5 tons.

Some central banks’ gold-buying pace has not stopped. Among them, the Czech Republic has maintained net purchases for 36 consecutive months. China has also increased holdings for 16 consecutive months; from November 2024 to February 2026 it cumulatively bought 44 tons of gold. Uzbekistan has kept net purchases for 5 consecutive months.

Joni Teves, a strategist at UBS, judged in a research note released on April 2 that the likelihood of central banks making a structural shift or conducting large-scale gold sell-offs is extremely low. UBS expects total gold purchases for all of 2026 to be about 800 to 850 tons, slightly lower than the level in 2025. This, he said, is more like “slowing down the pace” rather than a reversal of the trend.

Hu Jie, a professor at the Antai College of Economics and Finance of Shanghai Jiao Tong University and a former senior economist at the Federal Reserve, believes that for some countries, obtaining foreign-exchange gains through gold buying and selling operations can be one of the policy considerations. Against the backdrop of gold prices staying high, the current appropriate reduction can be seen as a technical adjustment based on market volatility.

Hedge funds sell down ahead of time

Some central banks have shifted from being “big buyers” to “big sellers,” directly impacting the gold market.

During all of March, COMEX gold futures prices fell by more than 11% cumulatively, with the front-month contract hitting a low near $4,100 per ounce. The U.S. Commodity Futures Trading Commission (CFTC) data show that, in the week ended March 24, asset management institutions dominated by Wall Street hedge funds cut their net long positions in COMEX gold futures options by 1.3144 million ounces, setting the largest single-week reduction record for that month.

The signal from investors pulling out is also obvious. Since gold prices staged a rebound and then retreated after March 2, holdings in the world’s major gold ETFs have continued to shrink. From March 2 to March 26, four major gold ETFs, including SPDR, iShares, PHAU, and SGBS, together reduced holdings by more than 75 tons. Increased market volatility weakened the holding experience, prompting investors to take profits and redeem, aligning with institutions’ de-risking sales and creating a resonance.

Analyzing the situation for a reporter from First Financial, the aforementioned trading insider said Wall Street hedge funds believe gold prices are facing a “double squeeze”: first, pressure from cooling expectations for Fed rate cuts and the strengthening U.S. dollar; second, gold sell-offs by multiple central banks have removed a key source of buy-side support.

A deeper concern lies in potential chain reactions. The insider further pointed out that if high oil prices—driven by the Middle East conflict—remain elevated for longer, more crude-oil importers may be forced to sell gold to obtain foreign exchange, stabilize their local currencies, and purchase energy. Economies with high dependence on crude oil, tight foreign reserves, and a high proportion of gold reserves will become potential high-risk zones for sell-offs. If more emerging market countries follow Turkey’s approach and treat gold as the last source of liquidity, supply pressures in the market will surge.

However, China International Capital Corporation (CICC) believes the risk that the Turkey model would spread to Gulf countries is limited. Geopolitical and strategic security demands have not shaken the long-term support for central banks’ gold purchases.

As of April 6, the front-month COMEX gold futures contract had rebounded to above $4,700 per ounce. Still, there is disagreement within institutional views on whether gold prices can quickly recapture the losses from March.

UBS expects a year-end 2026 gold price target of $5,400 per ounce, but noted that the key variable lies in the Middle East situation. If the conflict causes long-term damage to energy infrastructure, gold prices may face longer periods of consolidation and downside pressure. Conversely, if energy costs fall quickly, central banks’ willingness to buy gold would have a chance to reignite.

In its research note, CICC said that whether it is a pullback in oil prices driven by a downgrade in geopolitical conditions, a return to easier monetary policy, or increased supply-shock pressure that triggers a worsening economic downturn and thereby activates gold’s safe-haven attribute, both investment demand for gold and gold prices have room for upward repair.

Duty editor: Yulin