Gold To Show Resilience On Reserves, Debt Burdens

Gold To Show Resilience On Reserves, Debt Burdens

BY TYLER DURDEN THURSDAY, JUL 23, 2026 - 05:50 PM Authored by Garfield Reynolds via Bloomberg, Gold’s worst days are probably over as central banks keep buying the precious metal. The prospect of swelling sovereign bond issuance is also reviving its appeal as a hedge against the risk that governments will inflate away their debt burdens. Bullion has risen in July, trading above $4,100 an ounce, to head for its first month of gains since the Middle East war began. That’s even as renewed hostilities between the US and Iran have caused crude oil prices to surge again following a two-month slump. Gold’s advance signals investors may be returning to the metal as a diversification play as uncertainty over the war’s future mounts again, President Trump moves to revive his tariff plans and questions linger about the sustainability of the AI-led boom. The March-June slide in gold prices led more central banks than ever to say that they expect to increase holdings, which are about 10 times as large as the gold held in ETFs. China’s central bank added to its stockpile in June for a 20th straight month, with its biggest purchase since 2023. Poland is on pace to match its 2025 effort, when it reported buying more gold than any other central bank.

The long-term bull case for gold owes much to expectations for sustained demand from determined buy-and-hold types. That centers on deep-pocketed central banks and those retail investors who perceive it as an alternative to most financial assets. Bullion’s relatively stable supply, along with minimal counterparty risk, makes it attractive for investors with longer time horizons. Such buyers lean on the yellow metal’s hefty outperformance relative to equities this millennium, even taking into account a “lost decade.” Those are the sort of buyers who came to the fore in recent years when gold posted stunning gains despite higher real yields and a stronger US dollar, dynamics that had previously been regarded as certain to bring precious metals lower. The overall pace of gold buying by central banks sped up in the first quarter of 2026, with net official-sector purchases totaling 244 tons versus 208 tons in the previous quarter, according to estimates from the World Gold Council. That’s even as Turkey, Russia and Azerbaijan sold the precious metal for their own specific reasons. Meanwhile, speculators who began 2026 by piling into gold as prices more than doubled in the previous three years, abandoned the trade as the metal sank after the war fueled rate-hike bets, dimming the appeal of non-yielding bullion. ETF holdings also started to decline, highlighting the likelihood that financial investors more generally had turned away from gold as a momentum play.