Gold Market Shows Resilience Despite Second Quarter Price Correction

Total gold demand held steady at 1,269 tonnes during the second quarter, bringing the first-half total to 2,522 tonnes—a 2% increase compared to the previous year. While prices retreated from January highs, the market value of this demand reached a record $380 billion. This resilience persists even as higher U.S. interest rate expectations and rising bond yields increase the opportunity cost of holding non-yielding bullion.

Investment behavior remains bifurcated. North American investors led a liquidation of exchange-traded funds, which saw 45 tonnes of net outflows. Conversely, retail appetite for physical bars and coins stayed strong, particularly in China and India. China recorded its strongest first-half performance for bar and coin demand on record, reaching 314 tonnes as investors sought a hedge against a sluggish property market and domestic yield instability.

Central banks have emerged as a primary pillar of support, purchasing 289 tonnes in the second quarter—a fivefold increase from the opening months of the year. Poland led the buying with 51 tonnes, while China added 33 tonnes to its reserves. Despite cooling jewelry consumption—which fell 17% as buyers grappled with affordability—the World Gold Council maintains a constructive outlook for the remainder of 2026. The organization’s latest survey confirms that sentiment among official institutions remains high, with 45% of central banks planning to further increase their gold holdings in the coming year.