Gold Will Return to a Quasi-Monetary Role in Settlement

The World Gold Council revised its estimate of first-quarter 2026 central bank gold purchases from 244 tonnes to 57 tonnes—a 77% reduction, after reclassifying flows from the official sector to the over-the-counter market. The Q2 reading cited the original figure. Second-quarter purchases then came in at 288.9 tonnes, a record for a second quarter and 62% above Q2 2025, with central banks buying into a 16% quarterly price decline—the steepest in a decade—from gold's January 28 all-time high of $5,589. The half-year total of 345 tonnes is the lowest first half since 2022. Both facts belong in the record: the measured pace of accumulation slowed sharply in Q1, and the official sector then bought a record second-quarter volume into falling prices.

The crossover Appendix G named as a leading indicator received institutional confirmation and an institutional caveat in the same month. The European Central Bank's June 2 International Role of the Euro report put gold at roughly 27% of global central bank reserve assets, up from about 20% at the end of 2024, surpassing US Treasuries as the second-largest reserve asset after dollar-denominated holdings at 42%. The IMF's July 1 COFER brief then stated that gold's overtaking of Treasuries in 2025 was driven almost entirely by price valuation effects and is not reflected in the dollar's share of currency reserves, which rose to 57.13% in Q1 2026. Both are correct. Valuation did most of the lifting; sovereign buying did the rest, and continued into the quarter when valuation reversed.

The buyer composition held and the seller list lengthened. The National Bank of Poland added 51 tonnes in Q2 to reach 632 tonnes against its 700-tonne target. The People's Bank of China added 33 tonnes, its largest quarterly addition since late 2023, extending its streak to 20 consecutive months and its holdings to 2,346 tonnes—still under 10% of reserves. Uzbekistan, Kazakhstan, Singapore, Chile, Jordan, and the Czech Republic bought; Turkey (83 tonnes net sold year-to-date), Russia (44 tonnes), and Azerbaijan sold under fiscal pressure. The WGC's June 16 survey found 89% of reserve managers expect global gold holdings to rise over twelve months and a record 45% expect to raise their own; 93% now hold gold, up from 81% a year earlier, and a growing share report changing where it is vaulted. The settlement function the marker is named for did not advance. UNIT remains a research prototype of the Russian Academy of Sciences, not BRICS policy, with no reported transaction volume beyond its initial issuance. No change to gold's Basel treatment was reported in the quarter.

Status reads as drifting. The direction of official-sector accumulation has not reversed—Q2 set a record—but the evidence the Q2 reading stood on weakened in three ways this quarter: the first-quarter figure it cited was cut by 77%, the IMF attributed the gold-over-Treasuries crossover almost entirely to price, and the settlement function the marker is named for did not advance. Drifting records that the quarter's evidence partially supports the marker with caveats; it does not record a reversal. What would call this into question: a sustained reversal in central bank gold accumulation; gold's role remaining confined to reserve holding without settlement functionality scaling beyond pilots; or the emergence of a credible non-gold neutral settlement asset that fulfills the same function. The first did not register. The second describes the current state. The third has not appeared. What would return the marker to on-track: a gold-anchored settlement instrument with reported volume, or a second consecutive quarter of record official-sector buying with the valuation caveat no longer doing the work.