World Gold Council: Central banks added 166 tons of gold to official reserves in Q2, lower than recent average levels but indicative of still-healthy demand

World Gold Council: Central banks added 166 tons of gold to official reserves in Q2, lower than recent average levels but indicative of still-healthy demand

Central banks worldwide added 166 tons of gold to their official reserves in the second quarter of 2025, according to the latest data from the World Gold Council. While this figure is lower than recent average levels, it still indicates a robust demand for the precious metal. This development is part of a broader trend that underscores gold's enduring appeal as a store of value and a hedge against macroeconomic uncertainty [1].

The World Gold Council's report highlights that global central bank gold purchases reached 1,136 tonnes in 2023, the second-highest annual total on record. This surge in demand reflects a strategic shift by central banks to diversify their reserves and insulate them from U.S. monetary policy. Notably, China and India added 244 tonnes of gold to their reserves in Q1 2025, further cementing gold's role as a strategic asset [1].

The gold market has also seen a significant increase in speculative positioning, with hedge funds holding a record-breaking net long position of 311,949 contracts in July 2025. This bullish sentiment is driven by geopolitical tensions, Federal Reserve caution in rate-cutting cycles, and dollar depreciation, all of which are seen as risks that gold can mitigate [1].

The combination of central bank purchases and speculative positioning is creating a compelling case for investors to reassess their exposure to gold. As gold's role as a strategic asset becomes more pronounced, investors are advised to increase their gold allocations to 7–10% of portfolios, rising to 12–15% during periods of heightened geopolitical risk. Additionally, leveraging options strategies on gold-linked assets and rotating sectors toward defensive equities can provide a tactical advantage [1].

While the bull case for gold is strong, investors should remain vigilant to potential risks. Trade policy stabilization, a stronger USD, and central bank sales at high prices could all impact gold prices. Monitoring the Commitments of Traders (COT) report weekly and hedging with volatility-linked instruments can help mitigate these risks [1].

In conclusion, the second quarter of 2025 has seen a healthy demand for gold from central banks, driven by strategic diversification and macroeconomic uncertainty. For investors seeking to capitalize on this trend, a tactical approach to gold allocations and sector rotation is recommended.

References:
[1] https://www.ainvest.com/news/gold-resilient-bull-case-hedge-fund-bets-central-bank-demand-signal-strategic-entry-points-2507/