How Massive Sales Failed to Dent the Market
Gold absorbs massive central bank selling and ETF outflows with minimal price impact, revealing strong demand from emerging market central banks and bullish Wall Street targets.
In a striking demonstration of underlying strength, the gold market has absorbed two significant waves of selling pressure with minimal price impact, revealing a fundamental shift in supply and demand dynamics.
Central Bank Divergence: Turkey Sells as China Buys
The Central Bank of the Republic of Turkey executed the largest weekly reduction in its gold reserves since records began in 2013, offloading 69.1 tonnes in a single week. This move is part of a broader strategy; since the escalation of US-Iran tensions in late February, Turkey has sold approximately 120 tonnes of the precious metal, equivalent to roughly $20 billion. Governor Fatih Karahan described the policy to investors in London as “proactive, flexible, and controlled.” Reuters data indicates that of the 69.1 tonnes, about 26 tonnes were direct sales, with a further 42 tonnes related to swap transactions. The proceeds are being used to support the Turkish lira.
Concurrently, global gold-backed exchange-traded funds (ETFs) witnessed outflows totaling $5.4 billion. Despite this dual selling pressure from a major central bank and financial instruments, the gold price remained steadfast. This resilience is the core story, with gold trading near $4,651 per ounce—about 15% below its yearly peak but far from a collapse.
The Buying Floor: Emerging Market Accumulation
The explanation for this stability lies on the demand side. A sustained, systematic accumulation of gold by emerging market central banks has created a formidable buying floor. Institutions in China, India, and Russia have led this multi-year trend, diversifying reserves away from the US dollar. The People’s Bank of China, for instance, purchased gold for 15 consecutive months through January 2026, raising its holdings to 74.19 million ounces. According to the World Gold Council, central banks were net buyers of 863 tonnes in 2025, a figure substantially above the annual average for the previous decade.
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Wall Street’s Bullish Stance Amid Volatility
Even after a challenging March that saw gold decline over ten percent—its most significant monthly drop since June 2013—major investment banks have maintained or raised their year-end price targets. Their bullish outlooks underscore a belief in gold’s long-term thesis.
- JPMorgan: $6,300
- UBS: $6,200, with an upside scenario of $7,200
- Deutsche Bank: $6,000
- Goldman Sachs: $5,400 (for year-end 2026)
In this group, Goldman Sachs holds the most conservative forecast. The central argument from analysts is that investors who purchased gold as a hedge against fiscal risks and concerns over central bank independence are unlikely to part with their holdings.
Interest Rates and the Powell Succession
Headwinds for the metal persist from the interest rate environment. The US-Iran conflict pushed oil prices and inflation expectations higher, supporting bond yields and strengthening the US dollar—both traditional negatives for the non-yielding asset. The US Federal Reserve held rates steady in March, with a cut in April deemed unlikely.
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A pivotal factor on the horizon is leadership change at the Fed. The April meeting will be the last chaired by Jerome Powell, whose term concludes afterward. Should his successor be perceived as less resolute in combating inflation, demand for gold as an inflation hedge could be further ignited. The market direction in the coming weeks will also be influenced by potential developments regarding an Iran ceasefire and the release of first-quarter central bank gold data.
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