Central banks bought 28 tonnes of gold in May, SocGen warns of slower pace

Gold traded near $4,050 per ounce, down 27% from its January record, as the World Gold Council's latest survey showed central banks maintaining elevated purchases while Société Générale cautioned that the buying spree may moderate.

"Central banks remain net buyers of gold, with demand continuing at levels well above the pre-2022 average," the World Gold Council said in its 2026 central bank survey, which polled 70 institutions globally.

Poland added 18 metric tons of gold in May and China purchased 10 tons, according to the survey. The buying comes as spot gold has shed more than $1,600 from its January all-time high of $5,594.82, pressured by a stronger US dollar and hawkish signals from the Federal Reserve under new Chair Kevin Warsh.

Société Générale expects a more measured pace of future purchases, suggesting the record buying spree may slow. The bank's view contrasts with UBS, which forecasts gold rising 28% to $5,200 an ounce over the next 12 months on continued central bank demand and a weaker dollar.

Central Bank Demand Remains Structural Support

The World Gold Council survey, conducted in the first quarter of 2026, found that 29% of central banks plan to increase their gold reserves over the next 12 months, citing gold's role as a safe haven and hedge against currency debasement. The buying has been a key driver behind gold's multi-year rally, with the metal gaining more than 126% over the past five years.

The official sector's appetite for gold has reshaped the metal's demand profile. Central banks purchased more than 1,000 tonnes annually in each of the past three years, according to WGC data, far exceeding the 473-tonne average of the prior decade.

Wall Street Divided on Gold's Next Move

The divergence in outlooks reflects uncertainty over the path of US monetary policy. The Fed's hawkish turn under Warsh has pushed the dollar to 13-month highs, making dollar-priced bullion more expensive for holders of other currencies. Traders have priced in a potential rate hike as soon as September, according to CME data.

UBS projects gold at $5,200 an ounce within 12 months, citing Fed policy shifts, a weaker dollar, and sustained central bank buying. Goldman Sachs has cut its year-end target to $4,900 from $5,400, while ING now expects $4,600, down from $5,000.

For investors, the question is whether the pullback from $5,600 represents a buying opportunity or the start of a deeper correction. Central bank buying provides a floor, but a more measured pace from the official sector could cap upside in the near term.

This article is for informational purposes only and does not constitute investment advice.