Gold Erases 2026 Gains as Central Bank Selling Hits Headlines

Gold prices have erased all gains made in 2026, closing around $4,420/oz after hitting as high as 29.5% above the New Year level earlier this year. This decline is largely driven by renewed central bank selling, notably from the Central Bank of Russia, which has been offloading gold reserves through early 2026 to fund its war efforts in Ukraine, reducing its holdings to a four-year low and raising approximately $2.4 billion at current prices. Meanwhile, Turkey is reportedly considering selling or leveraging its $135 billion gold reserves, held partly at the Bank of England, to support the falling Turkish Lira, which has reached a fresh record low against the dollar amid regional geopolitical tensions. Central bank demand for gold has fallen below 25% of total net demand in 2025, down from an average of 33% over the previous three years, yet still remains elevated compared to the decades prior to Russia’s 2022 invasion of Ukraine. Poland, the largest central bank buyer over the past three years, has publicly debated tapping its substantial gold reserves to fund defense spending, signaling a tactical shift among national banks balancing bullion holdings and fiscal pressures. Analyst Bernard Dahdah from Natixis highlights that some central banks may be selling gold to support their currencies and cover energy costs amid ongoing geopolitical and economic turbulence. The gold market now faces near-term downside risks from ongoing central bank selling and broader currency weakness, though silver has taken a divergent path, rallying strongly above $70/oz after a sharp correction. Key catalysts to watch include further central bank reserve changes, geopolitical developments in the Middle East, particularly involving US-Iran tensions, and commodity supply disruptions such as LNG force majeure declarations impacting energy markets. Traders should monitor the $4,400-4,450 range for gold as critical support and resistance levels in the coming weeks.