Gold suffered another sharp setback in June, extending its losing streak to a fourth consecutive month as expectations of a more hawkish Federal Reserve and uncertainty tied to the Middle East weighed on investor sentiment. Yet while prices slid, official-sector demand remained resilient, with central banks continuing to add gold to their reserves at a strong pace. The metal fell 11.7% in June, following a 1.8% decline in May. By June 30, gold had dropped to $3,942 per ounce, its lowest level since early November 2025, according to BeInCrypto. For the quarter ending June 30, gold lost roughly 16%, marking its worst quarterly performance since the second quarter of 2013.
The decline came as markets reassessed the path of US monetary policy. Expectations that the Federal Reserve could keep policy tighter for longer or even deliver additional rate hikes reduced gold’s appeal. Because gold does not generate yield, higher interest rates tend to make the metal less attractive compared with income-bearing assets. Major banks have responded by cutting their gold forecasts. Goldman Sachs lowered its year-end target to $4,900 per ounce, while Deutsche Bank reduced its third-quarter forecast to $4,300. Deutsche Bank also warned that prices could fall as low as $3,800 if the Fed delivers three to four additional hikes.
Despite the price weakness, central banks remained active buyers. According to the latest World Gold Council data, official gold reserves rose by a net 41 tonnes in May, the second-strongest monthly total of the year after February. “Central banks were back in buying mode in May and with a little more spring in their step,” wrote Marissa Salim, senior research lead for APAC at the World Gold Council.
Buying was concentrated among several familiar names, led by Poland and China. The National Bank of Poland added 18 tonnes in May, its fourth consecutive month of double-digit purchases. Year-to-date, Poland has accumulated 64 tonnes, making it the largest sovereign buyer so far in 2026. Its total gold reserves now stand at 614 tonnes, bringing it closer to its stated target of 700 tonnes. China also continued its steady accumulation. The People’s Bank of China bought 10 tonnes in May, its 20th straight month of net purchases and its largest monthly addition since December 2024. China has added 25 tonnes so far this year, lifting its official gold reserves to around 2,331 tonnes, or about 9% of total reserves.
Other central banks also added to their holdings. The Central Bank of Uzbekistan purchased 9 tonnes in May, bringing its year-to-date total to 33 tonnes. Gold now accounts for roughly 87% of Uzbekistan’s total reserves. The National Bank of Kazakhstan bought 7 tonnes during the month and has added a net 20 tonnes so far this year. Its official gold reserves now stand at 361 tonnes, representing about 78% of total reserves.
Singapore also returned to the market. The Monetary Authority of Singapore purchased 4 tonnes of gold in May, its first monthly net purchase since September 2025. That raised Singapore’s total gold holdings to 197 tonnes. Separately, the authority is preparing to launch central bank gold vaulting services in October 2026 as part of Singapore’s broader ambition to become a regional gold hub. The Czech National Bank and the Central Bank of Jordan also added gold in May, buying 2 tonnes and 1 tonne, respectively. For the Czech central bank, the purchase extended a consistent run of net gold buying to 39 months.
Not all central banks were buyers. Russia and Turkey remained net sellers in May. The Central Bank of Russia sold 6 tonnes, extending its recent selling streak. Year to date, Russia has sold 34 tonnes, reducing its total gold holdings to 2,292 tonnes. The Central Bank of the Republic of Turkey sold 3 tonnes in May, bringing its 2026 net sales to 81 tonnes. Turkey remains the largest official-sector seller so far this year.
The continued buying comes despite gold’s recent selloff. The World Gold Council’s 2026 Central Bank Gold Reserves Survey showed that 89% of central bankers expect global gold reserves to increase over the next 12 months. A record 45% said they expect their institution’s gold reserves to rise over the same period. That sentiment highlights gold’s ongoing role as a strategic reserve asset, particularly for emerging market and developing economy central banks seeking diversification away from traditional reserve currencies.
The data also suggests that central banks are taking a longer-term view. While investors may be reacting to short-term shifts in Fed policy, central banks appear focused on reserve diversification, geopolitical risk management, and financial resilience.
The Bank of Korea is also reportedly preparing to gain exposure to gold through overseas gold-backed exchange-traded funds. According to the World Gold Council, the move is part of South Korea’s broader strategy to diversify its foreign currency assets. The bank currently holds 104 tonnes of gold, equal to about 3% of its total reserves, which is relatively low compared with many emerging market peers. Gold-backed ETFs are unusual among central banks, with only 4% of survey respondents saying they use them to purchase gold. However, they offer high liquidity and lower storage costs compared with physical holdings.
Gold is also gaining traction in Latin America. The World Gold Council noted new buying activity across the region in 2026. Chile has accumulated around 8 tonnes year-to-date, followed by Guatemala with 2 tonnes and Bolivia and Uruguay with 1 tonne each.
While the trend remains modest, it could signal broader interest in gold among Latin American central banks, particularly amid ongoing geopolitical and economic uncertainty.
The latest official-sector data covers May, before gold’s steep June decline. That makes the next monthly report especially important. If central banks continued buying through June’s double-digit selloff, it would reinforce the view that official demand remains structurally strong despite short-term price volatility. For now, the gold market is sending two very different signals. Investors have turned cautious as Fed policy expectations pressure prices, but central banks continue to view gold as a valuable long-term reserve asset. The question is whether that official demand can help stabilize the market after one of gold’s worst quarterly performances in more than a decade.
