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

[ If the high oil prices driven by the Middle East conflict continue, more crude oil importing countries may be forced to sell gold to obtain foreign exchange, stabilize their local currencies, and purchase energy. Those economies with high crude oil dependence, tight foreign exchange reserves, and a high proportion of gold reserves will become potential high-risk zones for gold selloffs. ]

Some central banks have started “tactical” gold selloffs.

Data released by the Central Bank of Turkey on April 2 show that, to cope with energy shortages triggered by the Middle East conflict and the pressure of depreciation on the domestic currency, the country urgently sold nearly 120 tons of gold in the almost two weeks ending March 28. The National Bank of Poland also put forward a plan in early March to sell part of its gold reserves to raise about 13 billion in 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.

The shift in gold-buying strategies by central banks across multiple countries has also disrupted some institutions’ plans to buy the dip. A new round of continuous games between long and short forces is ongoing. London gold spot prices slid all the way from $5,200 per ounce; on March 23, they fell to $4,098 per ounce at one point, with a monthly cumulative decline of 11.5%. Afterwards, the market rebounded somewhat; as of April 6, both gold futures and spot prices broke above $4,700 per ounce.

However, the current de-risking of gold by a small number of central banks is still “tactical” and “temporary,” and has not yet formed a systemic trend. A macro research note by Guolian Minsheng indicates that the selloffs by central banks such as those of Turkey, Poland, and Russia are driven more by “following the trend” and “temporarily easing fiscal crises,” and do not affect the long-term logic behind the rise in gold prices—namely, “weakening dollar credibility and increased central bank gold purchases.”

However, what needs to be kept in mind 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 gold selloffs. “Those economies with high crude oil dependence, tight foreign exchange reserves, and a high proportion of gold reserves will become potential high-risk zones for gold selloffs.” A trading insider told the First Finance reporter.

Forced to sell as gold buyers

According to data released by the Central Bank of Turkey, in the week ending March 28, the country’s gold reserves decreased by 69.1 tons, and over the past two weeks they decreased cumulatively by 118.4 tons. As a result, Turkey’s total gold reserves fell to 702.5 tons. Of this, more than half was carried out through gold-for-foreign-exchange swap transactions—i.e., using gold as collateral to obtain USD liquidity, and then redeeming it upon maturity.

The Central Bank of Turkey said that using gold transactions is intended to reduce the economic impact of the U.S.-Israel-Iran conflict; a large portion of these trades is in gold foreign-exchange tenors—meaning that at maturity, this portion of gold will return to the central bank’s reserves.

Guolian Minsheng’s macro research notes that the oil price supply shock has intensified the widening of current account imbalances. The Turkish lira has accelerated its depreciation, forcing the country’s central bank to sell gold to obtain foreign exchange liquidity. A “seesaw effect” between foreign exchange reserves and gold reserves is unfolding.

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

As of 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; after swap adjustments, net reserves fell to $43 billion, showing that the authorities are still continuously intervening in the foreign exchange market.

This large-scale selloff of gold also stands in sharp contrast to its proactive gold buying over the past 4 years. From 2022 to 2025, the Turkish central bank cumulatively increased its gold holdings by 325 tons, bringing its gold reserves to 603 tons by the end of 2025, with an estimated value of about $13.5 billion.

The Russian central bank, meanwhile, began selling gold as early as January this year. According to statistics from the World Gold Council, 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 to net sell 6 tons.

The strategy flip of Poland’s central bank, a major gold buyer, is also striking. On March 4, the Polish central bank proposed that it would raise funds of up to 48 billion zloty (Poland’s official currency, about $13 billion) by selling part of the roughly 550 tons of gold reserves, to support defense construction.

Yet less than two months earlier, on January 20, the Polish 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 bringing total gold reserves to 700 tons and placing itself among the top ten central banks globally by gold reserves. A report from the World Gold Council shows that the Polish central bank drove most of its gold buying activities in February, buying 20 tons, bringing its total gold reserves to 570 tons, and raising the proportion of gold reserves to 31%.

The accumulation trend has not reversed

Over the past 4 years, central banks around the world have been key buyers in the gold market.

According to data from the World Gold Council, from 2022 to 2024, global central banks purchased gold for three consecutive years, with average annual purchases of more than 1,000 tons—about twice the average annual amount purchased in the preceding decade. Even in 2025, when the gold price 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 shown some selling recently, they have not yet changed the overall gold-buying pattern. The February central bank gold-purchase monthly report released by the World Gold Council on April 2, 2026 shows that in that month, central banks net bought 19 tons of gold, which is below the monthly average of 26 tons reported for 2025, but is higher than the 5 tons of net purchases in January.

Some central banks have not stopped their pace of gold buying. Among them, the Czech Republic has continued to net buy for 36 consecutive months; China has also increased holdings for 16 consecutive months, accumulating 44 tons of gold from November 2024 to February 2026; and Uzbekistan has maintained net buying for five consecutive months.

In a research report released on April 2, UBS strategist Joni Teves judged that the likelihood of central banks making a structural shift and carrying out large-scale gold selloffs is extremely low. UBS expects total gold purchases in 2026 to be about 800 to 850 tons, slightly lower than 2025, 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 Federal Reserve, believes that for some countries, obtaining foreign-exchange gains through gold buy-and-sell operations can be one of the policy considerations. In a context where gold prices are high, an appropriate reduction at present can be seen as a technical adjustment based on market volatility.

Hedge funds cut positions early

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

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

The signal of investors leaving is also clear. Since gold prices temporarily surged and then pulled back after March 2, global major gold ETF holdings have continued to shrink. From March 2 to March 26, four major gold ETFs, including SPDR, iShares, PHAU, and SGBS, collectively reduced holdings by more than 75 tons. As market volatility intensified, it weakened the holding experience, prompting investors to take profits and redeem, which echoed institutions cutting positions.

The above-mentioned trading insider analyzed to the First Finance reporter that Wall Street hedge funds believe gold prices are facing a double squeeze: first, pressure from cooling expectations for Federal Reserve rate cuts and a stronger dollar; second, gold selloffs by central banks in multiple countries, causing them to lose key buy-side support.

Deeper concern lies in potential chain reactions. The insider further pointed out that if high oil prices driven by the Middle East conflict continue, more crude oil importing countries may be forced to sell gold to obtain foreign exchange to stabilize their local currencies and purchase energy. Those economies with high crude oil dependence, tight foreign exchange reserves, and a high proportion of gold reserves will become potential high-risk zones for gold selloffs. Once more emerging-market countries follow Turkey and regard gold as the last source of liquidity, market supply pressure will rise sharply.

However, CICC believes the risk of the Turkey model spreading to Gulf countries is limited, and that long-term support for central bank gold purchases from geopolitical and strategic security demands has not wavered.

As of April 6, the front-month COMEX gold futures contract has rebounded to above $4,700 per ounce. However, there are differences among institutional views on whether gold prices can quickly recover the losses from March.

UBS expects a year-end 2026 gold price target of $5,400 per ounce, but it 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 have a chance to reignite.

CICC’s research report also states that, whether it is a pullback in oil prices driven by a downgrade in the geopolitical situation, monetary policy returning to a more accommodative stance, or supply shocks worsening pressure for an economic recession—thereby triggering gold’s safe-haven attribute—there is upside room for both gold investment demand and gold prices. 

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