Gold buying demand from central banks has become one of the important drivers helping gold prices maintain their upward momentum for many years and once reached a historic peak of 5,600 USD/ounce. The latest survey results of the World Gold Council (WGC) also show that the formal sector still tends to continue to increase gold reserves. However, experts from the French multinational financial and banking group (Société Générale) believe that this expectation needs to be viewed cautiously because the intention to buy does not always turn into actual transactions.
This year, there is a record 79 central banks participating in the WGC survey. Among these, 89% of foreign exchange reserve managers believe that the amount of gold held by central banks worldwide will continue to increase in the next 12 months. At the same time, 45% of surveyed units said that their own banks plan to supplement gold reserves, up from 43% in 2025.
However, commodity analysts at Société Générale believe that prolonged instability in the Middle East and disruptions in the global energy market are creating no small obstacles for the foreign exchange reserve management activities of central banks.
According to the French bank, as long as geopolitical conflicts are not resolved and the energy market is not stable again, central banks are likely to prioritize solving other urgent issues instead of stepping up physical gold purchases.
However, Société Générale also believes that even in the context of many uncertainties, central banks still have room to increase their gold holdings.
To more closely assess the gold buying prospects of the official sector, Société Générale said they prioritize analyzing the intentions of central banks to buy gold within a six-month timeframe instead of the whole year.
Like other portfolio managers, central banks are often able to predict asset allocation strategies quite accurately in the short term, but the level will certainly decrease significantly as it lasts up to a year. Therefore, statements about gold buying plans will have a higher reference value if considered in a shorter period of time," the analysis group said.
Based on this method, Société Générale forecasts that central banks may buy 100 to 120 tons of gold in the remainder of the year.
According to experts, this figure is about twice as high as the amount of gold recorded in the first four months of the year and is consistent with the assessment that central banks' gold buying demand will soon increase again.
Société Générale also said its forecast is consistent with UK trade data and data on gold reserves at the London Gold Market Association (LBMA).
Accordingly, the total amount of gold exported by the UK reached 35 tons in April, a sharp increase compared to 13 tons in March. However, this figure is still lower than the average of 47 tons in April since 2022 and lower than the average of 53 tons since 2015.
China continues to be the largest destination for global gold flows. In April alone, gold exports from the UK to China reached 25 tons, significantly higher than the average of 17 tons in April since 2022 and the average of 13 tons since 2015.
Meanwhile, data from LBMA also shows that the amount of gold stored in the association's warehouses is consistent with the trend of increasing export activities, reflecting a significant improvement in basic demand from central banks.
Although expectations of buying power from central banks will continue to be maintained in the last months of the year, Société Générale believes that investment demand in gold will still be mainly affected by the opportunity cost of holding precious metals.
According to the basic scenario of economic experts at Société Générale, the real yield of 10-year US Treasury bonds will remain above 2% in Q3 before gradually decreasing at the end of the year and the first half of 2027.
This makes the bank maintain a neutral stance on gold in the summer, but the outlook will become more positive at the end of the year as the opportunity cost of holding gold begins to decrease.
