World Gold Council: Retail Buyers Retreat from Gold Market, but Central Banks Buy More

The World Gold Council (WGC) has reduced its forecast for gold investment demand in 2026 from 400 tons to 200 tons. At the same time, the organization has increased its estimate of central bank purchases; a change that indicates that with retail buyers retreating, central banks are playing a more prominent role in the gold market.

According to Mihan Blockchain, global demand for gold bars and coins in the third quarter fell by 19% compared to last year, reaching 268 tons, the lowest level in four years. In contrast, gold exchange-traded funds (ETFs) attracted $31 billion in investment during the same period, and central bank purchases also exceeded forecasts.

Why Did Retail Buyers Reduce Gold Demand Forecasts?

The World Gold Council considers the decline in gold bar and coin purchases in the second half of the year as one of the main reasons for adjusting its forecast. Despite this decline, the organization still assesses physical demand as relatively resilient.

In the third quarter, demand for gold bars and coins in the United States reached 8 tons, marking the weakest quarterly performance since late 2019. This indicator also saw a 40% decrease in India compared to last year.

The World Gold Council has cited factors such as limited price fluctuations of gold, expectations for sustained high interest rates in the U.S., and stock market growth as reasons for the reduced willingness of buyers.

However, not all segments of the gold investment market performed poorly. Demand for gold bars and coins in China reached a record 393 tons in the first nine months of the year, and gold ETFs also performed better than expected by attracting $31 billion in the third quarter.

The council still considers investment to be the most important factor for gold demand growth in 2026 and expects ETF purchases and physical investment to support the market.

Central Banks Compensate for Retail Buyers' Retreat

As retail demand has decreased, central banks have added more to their reserves than the World Gold Council expected. They purchased 321 tons of gold in the third quarter, which is 42% more than the same period last year. Thus, their total purchases since the beginning of the year have reached 675 tons.

In response to this trend, the World Gold Council has raised its forecast and now expects central bank purchases in 2026 to at least match the levels of 2025.

Notably, only 120 tons of the purchases in the third quarter were officially reported, and the council estimates that about 63% of the purchases remain unreported. Additionally, China with 63 tons and Poland with 40 tons were the largest reported buyers during this period.

Analysis of data from the World Gold Council also shows that since the third quarter of 2022, there has been a negative correlation of -0.7 between gold's quarterly returns and central bank demand; meaning that typically, as gold returns decrease, central bank purchases increase. However, the council emphasizes that this relationship is not stable enough to establish a definitive price floor for gold.

Gold has fallen by 4.9% over the past month, with its price today reaching $3,937.98. In the fourth quarter, interest rates will continue to be one of the potential obstacles to investment demand growth. The Federal Reserve kept interest rates unchanged at its October meeting, but FedWatch data indicates a 78.4% probability of an interest rate hike in December.

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