Gold’s Official Buyers Stay Active as Election and Rate Risks Cloud the Outlook

Gold’s demand is being carried by central banks and funds, not by a broad-based return of household buyers. The World Gold Council’s latest quarterly report shows official institutions and physically backed ETFs adding metal even as demand for bars, coins and jewelry weakened. That support has not insulated bullion from pressure tied to US interest rates, the dollar and investors’ need for liquidity.

Central banks bought a net 321 tonnes in the third quarter of 2026, up 42% from a year earlier and the largest quarterly total since the end of 2024. Their purchases from January through September reached 675 tonnes, 6% above the same period last year. The WGC expects full-year buying to reach at least last year’s level. But roughly two-thirds of the estimated purchases were not officially reported, leaving a substantial share unconfirmed by disclosed transactions.

Reserve diversification, reduced reliance on the US dollar and geopolitical risks are among the reasons for central-bank buying. WGC chief market strategist John Reade said the quarter’s price decline may also have encouraged purchases. A strong dollar could provide an additional incentive for central banks that are skeptical of the currency over the long term, he said. Those are possible explanations, not a promise of continued buying.

Funds add metal while consumers pull back

Physically backed gold ETFs took in 211 tonnes during the quarter, lifting holdings to a record 4,256 tonnes. Net inflows were worth around 31 billion US dollars, also a record. Yet inflows were lower than in the year-earlier quarter, showing that record holdings can coexist with slower growth.

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Demand for bars and coins fell 19% to 268 tonnes, its lowest level in four years. The decline was particularly marked in India, while demand in China rose. ANZ said Chinese households had recently taken advantage of lower prices to buy more gold. Jewelry demand also weakened, dropping 17% to 313 tonnes—the lowest third-quarter reading in the WGC’s data series.

Across all categories, global gold demand including over-the-counter transactions came to 1,369 tonnes, 1% below the year-earlier quarter. Its value, however, climbed 22%. The difference underlines why rising demand value should not be mistaken for an increase in the amount of gold purchased.

Washington’s next moves matter to bullion

The US midterm elections put the dollar, Treasury yields and future fiscal policy in focus. Reuters reported that continued Republican control could favor further tax cuts and higher defense spending, adding to deficit risks. A divided Congress could make budget negotiations harder and intensify disputes over the debt ceiling next year. The currency implications are less clear-cut: higher Treasury yields could support the dollar in the near term, while expanding deficit financing could weigh on it over time.

Rate expectations remain a more immediate hurdle for gold. CME FedWatch showed a market-implied 73% probability of a December rate increase. The Federal Reserve left its target range unchanged at 3.75–4% on October 28. US manufacturing also proved more resilient in October: the ISM index rose to 55.5 from 54.5 in September. JOLTS job openings are due today, with the US employment report scheduled for Friday, November 6.

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Bullion’s latest price readings vary across the two market reports: one put gold at 3,904.20 USD per ounce, down -1.1%, while another reported a close of 3,909.43 USD, down -0.9%. Both point to a recovery that has yet to establish a firm footing. ING analysts expect a partial rebound but see higher rates and a stronger dollar as near-term headwinds; in their view, lower energy prices alone will not be enough to overcome them.

Liquidity needs have also contributed to recent selling, including sales of liquid metals to meet margin calls, according to media reports. The previous day, lower oil prices and hopes for diplomatic progress between the US and Iran eased inflation concerns and supported gold. ING cautioned that de-escalation should not yet be treated as assured. WGC analyst Louise Street sees stable demand through year-end as the most likely scenario, while the Bloomberg-tracked analyst consensus puts the median fourth-quarter gold price at 4,350 US dollars per ounce. That is a forecast, not a price already reached.

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