Gold Price Falls Significantly, Gold Demand Remains Stable: Why the Market Remains Divided
August 5, 2026
The gold price has dropped considerably since its record high at the beginning of the year. Nevertheless, global demand for the precious metal has not collapsed. Current figures from the World Gold Council show a market in which individual buyer groups are behaving very differently.
On July 30, 2026, gold was traded on the spot market at around 4,077 US dollars per troy ounce during the day. At the beginning of the year, the price had temporarily exceeded the 5,500 US dollar mark. This represents a decline of approximately one quarter from the record level. However, the lower stock market price alone does not allow for a conclusion on how strong the actual demand for gold is.
According to the Gold Demand Trends published by the World Gold Council on July 30, global gold demand, including over-the-counter (OTC) transactions, amounted to approximately 1,269 tonnes in the second quarter of 2026. Compared to the corresponding quarter of the previous year, the volume remained practically unchanged.
In the entire first half of the year, 2,522 tonnes of gold were demanded. This was two percent more than a year earlier. Due to the significantly higher average price compared to 2025, the value of demand even reached a new high of around 380 billion US dollars.
The figures illustrate an important difference: the gold price reacts daily to interest rate expectations, currency movements, futures market positions, and geopolitical news. Physical and strategic demand often changes more slowly. A falling price therefore does not automatically mean that buyers are losing interest in gold.
| Market segment in the second quarter of 2026 | Demand or change | Classification |
|---|---|---|
| Total demand including OTC | 1,269 tonnes | Stable compared to the previous year |
| Bars and coins | 307 tonnes | Around 3 percent less than in the previous year |
| Gold ETFs | Outflow of 45 tonnes | Primarily sales in North America |
| Central banks | 289 tonnes | 62 percent more than in the previous year |
| Over-the-counter demand | 327 tonnes | Around 91 percent more than in the previous year |
| Jewelry demand | 278 tonnes | 17 percent less than in the previous year |
Source and data status: World Gold Council, July 30, 2026.
The most significant weakness in the second quarter was seen in exchange-traded gold products. Globally, around 45 tonnes were withdrawn from gold-backed ETFs. Selling pressure was particularly strong in North America. There, outflows in the entire first half of the year amounted to 61 tonnes – the weakest first half since 2013.
The World Gold Council cites rising real interest rates, a stronger US dollar, and higher expectations for inflation and key interest rates as burdening factors. Since gold itself does not yield ongoing interest, rising bond yields increase the opportunity costs of the precious metal in the short term.
However, the global picture was not uniform. Asian gold ETFs recorded inflows totaling 70 tonnes in the first half of the year, marking their strongest first half to date. European funds saw an increase of eight tonnes. On balance, global ETF holdings still increased by 18 tonnes in the first half of the year, despite the weak second quarter.
Global demand for gold bars and gold coins amounted to 307 tonnes in the second quarter. This was only three percent less than in the same period of the previous year. Compared to the exceptionally strong first quarter, the volume did decrease by 36 percent. However, the World Gold Council views this development more as a normalization after two unusually strong quarters rather than a fundamental collapse in demand.
In the entire first half of the year, bar and coin demand reached 784 tonnes, placing it at one of the highest levels ever recorded in a first half-year. The value of bars and coins purchased in the second quarter increased from 33.3 billion US dollars in the previous year to 44.5 billion US dollars due to the high price level.
This highlights the difference between short-term traders and long-term oriented market participants. ETF positions can be changed within seconds. In contrast, the acquisition of physical bars or coins often follows a longer-term motive, such as the desire for asset diversification, direct ownership, or a reserve independent of the banking system.
One of the most striking developments was the return of central banks. They bought a net total of around 289 tonnes of gold in the second quarter. This was 62 percent more than in the same quarter of the previous year and more than five times as much as the subsequently revised 57 tonnes of the first quarter.
The National Bank of Poland was particularly active among the reported buyers. It acquired 51 tonnes in the second quarter, increasing its gold reserves to 632 tonnes by the end of June. China bought a further 33 tonnes, officially reporting gold holdings of 2,346 tonnes. Central banks from Uzbekistan, Kazakhstan, Jordan, and the Czech Republic also reported additional purchases.
For the entire first half of the year, the World Gold Council calculated central bank purchases of around 345 tonnes. Although this was the lowest half-year value since 2022, it was significantly influenced by sales from individual countries in the first quarter. The fundamentally positive stance of central banks toward gold has apparently not changed.
In a recent survey by the World Gold Council, 89 percent of the reserve managers surveyed expected global gold reserves to increase over the next twelve months. A record proportion of 45 percent planned to expand their own holdings. The main reasons cited are the diversification of currency reserves, geopolitical uncertainties, and the long-term function of gold as a store of value.
In addition to central banks, over-the-counter demand in particular supported the gold market. The so-called OTC segment reached around 327 tonnes in the second quarter, 91 percent above the previous year's level. For the entire first half of the year, the World Gold Council estimates OTC demand at 571 tonnes.
These transactions take place outside of regular stock exchanges and are therefore less transparent than ETF purchases or futures market positions. According to the industry association's assessment, the demand from wealthy Asian private investors and family offices played an important role.
China remained the world's largest market for bars and coins. In the second quarter, 107 tonnes were demanded there. Although this was below the exceptional first quarter, demand in the entire first half of the year reached a record 314 tonnes.
The fact that demand remains stable while the price falls seems contradictory at first glance. The reason lies in the structure of the gold market. The daily stock market price is not determined solely by trade in physical metal. Futures markets, derivatives, ETFs, real interest rates, exchange rates, and the positioning of institutional investors often influence the price much more quickly.
In the second quarter, for example, central bank and OTC demand rose sharply. At the same time, North American investors withdrew capital from gold ETFs. The stronger dollar and the expectation of persistently high interest rates intensified price pressure. Stable physical purchases could not fully offset these short-term capital movements.
The market is therefore not simply strong or weak. Rather, demand is shifting between regions and investment forms. Western financial investors partially reduced their positions, while central banks and Asian investors bought more heavily at lower prices.
For further price development, it will likely be decisive whether Western financial investors return to the market more strongly alongside central banks and Asian buyers. Falling real interest rates, a weaker US dollar, or a waning expectation of further interest rate hikes could improve the attractiveness of non-interest-bearing assets.
A renewed increase in geopolitical or financial policy uncertainty could also trigger additional demand. Conversely, permanently high interest rates, a strong dollar, and an easing of political risks can weigh on the gold price. A reliable short-term forecast cannot be derived from this.
The World Gold Council expects investment purchases to remain the most important growth driver for the second half of the year. In this context, over-the-counter transactions and Asian investors could gain importance. According to the association's assessment, central banks are also likely to remain net buyers, although possibly no longer to the same extent as in the past four years.
The price decline is real, but it only tells part of the story. Total demand in the second quarter remained at almost 1,270 tonnes. Central banks bought significantly more gold, demand for bars and coins remained solid in a long-term comparison, and over-the-counter purchases increased sharply.
At the same time, ETF outflows show that gold reacts sensitively in the short term to interest rates, dollar strength, and the expectations of large financial investors. Investors should therefore view price movements and structural market data separately.
For physical gold, it also remains crucial whether a specific product is actually available and deliverable. With Spargold, only products that are physically available are offered. This ensures it remains clear which precious metal stands behind a purchase.
The gold price is a snapshot – the composition of demand shows the long-term structure.
This article is for information purposes only and does not constitute investment advice or an invitation to buy or sell financial instruments or precious metals.
Stay farsighted
Your Helge Peter Ippensen