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

“Economies with high dependence on crude oil, tight foreign reserves, and a high share of gold reserves will become potential high-risk sell-off zones.”

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

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

Central banks across multiple countries have shifted their gold-buying strategies, which has also disrupted some institutions’ plans to buy the dip. A new round of ongoing games between long and short forces continues. London spot gold prices fell steadily from $5,200 per ounce, at one point dipping to $4,098 per ounce on March 23. The cumulative monthly decline reached 11.5%. After that, the market saw some rebound, and as of April 6, both gold futures and spot prices broke above $4,700 per ounce.

However, the current reduction in gold holdings by a small number of central banks still falls under “tactical” and “temporary” actions; it has not yet formed a systematic trend. Lianhe Securities Minsheng macro research said that the sell-offs by central banks such as those of Türkiye, Poland, and Russia are driven more by “following the trend” and “temporarily easing fiscal crisis” considerations, and do not affect the long-term logic that “a weakening dollar credit environment and increased central bank gold buying” will support higher gold prices.

That said, what needs vigilance is 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 selling gold. “Economies with high dependence on crude oil, tight foreign reserves, and a high share of gold reserves will become potential high-risk sell-off zones.” A trading source told First Financial Daily.

Forced to sell: the main gold buyers

According to data released by the Central Bank of Türkiye, in the week ending March 28, the country’s gold reserves fell by 69.1 tons, and it reduced by 118.4 tons over the past two weeks. As a result, Türkiye’s total gold reserves fell to 702.5 tons. Of that, more than half was completed through gold-for-foreign-currency swap transactions—i.e., using gold as collateral to obtain dollar liquidity, and then redeeming it at maturity.

The Central Bank of Türkiye said it uses gold trading to reduce the economic impact of the conflict between the U.S., Israel, and Iran. Much of the trading involves gold-foreign exchange term transactions; at maturity, this portion of gold will return to the central bank’s reserves.

Lianhe Securities Minsheng macro research pointed out that the oil price supply shock has led to a worsening of current account imbalances, Türkiye’s lira has accelerated depreciation, and the country’s central bank has been forced to sell gold to obtain foreign exchange liquidity. The “seesaw effect” between foreign exchange reserves and gold reserves is currently playing out.

Since the outbreak of the U.S.-Israel-Iran conflict, the U.S. dollar index has surged, and the Turkish lira versus the dollar has repeatedly hit historic lows, at one point falling to 44.35:1. Overseas capital then withdrew heavily from the stock and bond markets. Meanwhile, Türkiye imports nearly 90% of its crude oil dependence; after oil prices broke above $100 per barrel, energy costs increased sharply.

By March 30, Türkiye had cumulatively used $44.3 billion in foreign exchange reserves to stabilize the lira exchange rate, causing its gold net reserves to decline significantly. In the week of March 20, the country’s total international reserves were $177.45 billion. After swap adjustments, net reserves fell to $43 billion, showing that authorities are still continuing to intervene in the foreign exchange market.

This large-scale sell-off of gold also stands in sharp contrast to its strong gold accumulation over the past four years. From 2022 to 2025, the Central Bank of Türkiye cumulatively added 325 tons of gold, bringing its gold reserves to 603 tons by the end of 2025, with an estimated value of about $135B.

The Russian central bank 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 that month, and continued to be a net seller of 6 tons in February.

The wavering strategy of Poland’s central bank, a major gold accumulator, is also notable. On March 4, Poland’s central bank proposed financing of up to 48 billion zlotys (the Polish official currency, roughly $13 billion) by selling part of its gold reserves of about 550 tons to support defense construction.

But less than two months earlier, on January 20, Poland’s central bank had just announced that, for “national security reasons,” it approved a new gold purchase plan of up to 150 tons, aiming to bring total gold reserves to 700 tons and place it among the top ten central banks with the most gold reserves globally. World Gold Council reports show that the Polish central bank drove most of the gold purchases in February, buying 20 tons, which brought its total gold reserves to 570 tons, raising the proportion of total reserves 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 shows 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 in the prior decade. Even in 2025, when gold prices hit new highs, global central bank 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 pattern of gold buying. The World Gold Council’s February central bank gold purchases monthly report released on April 2, 2026 shows that central banks net bought 19 tons of gold that month, below the monthly average of 26 tons reported in 2025, but above the net purchase volume of 5 tons in January.

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

UBS strategist Joni Teves, in a research report released on April 2, judged that the likelihood of central banks making a structural shift and launching large-scale gold sell-offs is extremely low. It expects full-year gold purchases in 2026 to be about 800 to 850 tons, slightly lower than 2025, and more like “slowing down” rather than a reversal of the trend.

Hu Jie, a professor at the Shanghai Advanced Finance Institute of Shanghai Jiao Tong University and a former senior economist at the U.S. Federal Reserve, believes that for some countries, earning foreign exchange through gold trading operations can be one of the policy considerations. In a context where gold prices are high, appropriately trimming holdings now can be seen as a technical adjustment based on market volatility.

Hedge funds cut first and forced sell-offs

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

Throughout March, COMEX gold futures prices fell cumulatively by more than 11%, and the front-month contract at its lowest touched $4,100 per ounce. Data from the U.S. Commodity Futures Trading Commission (CFTC) shows that as of the week ending March 24, asset management institutions led by Wall Street hedge funds cut their net long positions in gold futures options by 1.3144 million ounces, setting the largest single-week reduction record for the month.

The signals of investors leaving are also clear. Since gold prices staged a spike and then pulled back starting March 2, global major gold ETF holdings have continued to shrink. From March 2 to March 26, the four major gold ETFs—SPDR, iShares, PHAU, and SGBS—collectively reduced holdings by more than 75 tons. Increased market volatility weakened the holding experience, prompting investors to take profits and redeem, aligning with institutional de-risking and de-leveraging to form a resonance.

The above-mentioned trading source analyzed to First Financial Daily that Wall Street hedge funds believe gold prices are facing a double squeeze: first, pressure from cooling expectations for Federal Reserve rate cuts alongside a stronger U.S. dollar; second, gold sell-offs by central banks across multiple countries, which causes them to lose critical buyer support.

A deeper concern lies in potential chain reactions. The source further pointed out that if high oil prices driven by the Middle East conflict persist, more crude-oil-importing countries may be forced to sell gold to obtain foreign exchange to stabilize their currencies and procure energy. Economies with high dependence on crude oil, tight foreign reserves, and a high share of gold reserves will become potential high-risk sell-off zones. Once more emerging-market countries follow Türkiye’s example and view gold as a last-resort liquidity source, market supply pressure will surge sharply.

However, China International Capital Corporation (CICC) believes that the risk of the Türkiye model spreading to Gulf countries is limited, and geopolitical and strategic security demands for central bank gold buying support have not been shaken in the long term.

As of April 6, the front-month COMEX gold futures contract had rebounded to above $4,700 per ounce. But on whether gold prices can quickly recover the losses from March, institutional views differ.

UBS expects a gold price target of $5,400 per ounce by end-2026, but notes that the key variable lies in the situation in the Middle East: if the conflict leads to long-term damage to energy infrastructure, gold prices may face longer periods of consolidation and downward pressure; conversely, if energy costs fall quickly, central banks’ willingness to buy gold may only then reignite.

CICC’s research report also said that regardless of whether geopolitical tensions downgrade and lead to a pullback in oil prices, whether monetary policy returns to easing, or whether supply shocks intensify economic recession pressure—thereby triggering gold’s safe-haven attributes—there is room for upward repair in both investment demand for gold and its price.

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