Central banks kept buying gold in Q3 even as the price fell 30% from its record
Central banks bought 321 tonnes of gold in the third quarter, up 42% from a year earlier, while the price closed Thursday at $3,885.30 an ounce, about 30% below its January record.
The buyers who did not leave
Central banks bought 321 tonnes of gold between July and September, 42% more than a year earlier, the World Gold Council reported on Nov. 3. Purchases in the first nine months of the year reached 675 tonnes, 6% more than in the same period of 2025. Exchange-traded funds added 211 tonnes in the quarter, taking their holdings to a record 4,256 tonnes.
The buying came while the price fell. Gold closed Thursday at $3,885.30 an ounce, down from a record of $5,594.82 in late January, a drop of about 30%. Spot gold rose 1% to $3,915.31 on Friday as bargain hunting emerged, Reuters reported, but it was still down 3.5% for the week. U.S. gold futures for December delivery gained 0.9% to $3,919.60.
Real yields set the price
What links the buyers and the sellers is the real yield on the 10-year U.S. Treasury bond, the return after inflation. It was 1.90% when gold set its record on Jan. 30 and stood at 2.86% on Thursday, after reaching 2.95% on Oct. 5. Gold pays no income, so each rise in that yield raises the cost of holding it.
The Federal Reserve is the reason the yield moved. Core consumer prices rose 0.3% in October for a third month running, and traders put an 89% chance on a 25-basis-point rate hike in December, with an 11% chance of a 50-basis-point move, according to CME's FedWatch tool. New York Fed President John Williams said on Thursday that more rate hikes are likely, Reuters reported.
Households stepped back, Goldman cut its forecast
Households bought far less. Jewellery demand fell 17% to 313 tonnes, the weakest third quarter in the Council's records, and purchases of bars and coins fell 19% to 268 tonnes. The average price in the quarter was $4,262 an ounce. Mines produced 1,071 tonnes, a record for a third quarter, while recycling fell 8% to 314 tonnes.
Goldman Sachs cut its year-end forecast for gold to $4,150 an ounce from $4,650, and its end-2027 forecast to $4,800 from $5,400, Kitco reported on Nov. 13. The bank's base case assumes another Fed rate hike in December. It still expects central bank purchases to average 60 tonnes a month through 2026 and 2027, against a pre-2022 average of 17 tonnes a month.
- $3,915.31Spot gold on Friday, up 1%
- 3.5%Spot gold's fall for the week
- $3,919.60December gold futures, up 0.9%
- 89%Chance of a 25-basis-point December hike
- 11%Chance of a 50-basis-point December hike
