Can I still buy gold that has gone through a few roller coaster rides?

“Only investors and institutions that have allocated gold can quickly exchange it for U.S. dollar cash in a crisis, getting through the brutal winter for the capital markets.”

** By /Ba Jiuling**

On the afternoon of April 6, among the many “new developments” in the Iran–U.S. war, a “temporary ceasefire” peace proposal that drew considerable attention came to light.

According to Xinhua News Agency, citing coverage from foreign media, Pakistan has drawn up a framework plan to end the conflict between the U.S. and Iran and is in communication with Iran and the U.S. The plan is intended to first achieve an immediate ceasefire and reopen the Strait of Hormuz, and then reach a final agreement within 15 to 20 days. The final agreement may include Iran’s commitment not to pursue nuclear weapons in exchange for sanctions relief and the unfreezing of frozen assets.

Whether the war can end as soon as possible is still up in the air. It’s just that the gold market seems to have some expectations about it. The news emerged at around 15:00 Beijing time, and London gold spot quickly surged upward by 1.2%.

London gold spot once jumped by 1%

When the news of peace came, gold rose—somewhat against common sense. But this is the new normal in the current market: the more intense the war is, the more gold is pressured. In the just-passed March, for example, taking London gold spot as the reference, it fell a total of 11.54%, with a swing as high as 25%. It even dipped below 4,100 U.S. dollars per ounce, giving investors who had been determined to hold gold for safety a ride on a roller coaster.

However, just over the weekend, even more painful news came: as a core force stabilizing gold, among global central banks, two major central banks “defected” and fled from gold in March. They are Poland and Turkey. At the same time, the world’s two largest gold ETF fund providers also announced a shift.

So what impact will these central banks’ actions have on investors holding gold? Today’s article will discuss this new development.

Can central banks and big institutions not sit still?

According to data from the World Gold Council, Turkey’s central bank increased its holdings by as much as 325 tons of gold from 2022 to 2025—effectively doubling the gold reserves in the treasury within three years.

However, since March 13, Turkey’s central bank has reduced its gold holdings for three consecutive weeks, totaling a reduction of 126.4 tons of gold—its largest reduction since 2018.

War has been the main catalyst for this shift. The outbreak of the Iran–U.S. war caused the U.S. dollar index to soar. Correspondingly, Turkey’s currency, the lira, depreciated severely. The domestic currency’s exchange rate against the U.S. dollar hit new historical lows for 11 consecutive times. As a result, Turkey’s central bank had to abandon its gold-buying plans and instead stabilize the market exchange rate by selling gold heavily, while preventing capital outflows.

In just March, Turkey’s central bank spent 25 billion U.S. dollars in foreign exchange reserves to intervene.

Turkey’s gold reserves

Poland is no exception. In 2025, Poland’s central bank increased its gold holdings by 102 tons, becoming the world’s largest buyer of gold for two consecutive years. Originally, in January of this year, Poland’s central bank still planned to continue increasing its holdings by 150 tons—an unwavering bullish stance on the gold market.

But after the war broke out, Poland quickly turned into a “major bear.” Poland’s central bank governor submitted a proposal to raise 13 billion U.S. dollars by selling gold reserves for defense spending.

And as early as January to February, Russia’s central bank had cumulatively reduced its gold holdings by 15 tons; for the purpose of stabilizing the market, Iran’s central bank also sold gold worth 3 billion U.S. dollars in March.

Aside from central banks, a wave of selling has also appeared across global gold ETF funds.

On March 1, the official holdings of the world’s largest gold ETF, “SPDR Gold Trust (GLD),” were 1,100.06 tons; by March 31, the holdings had decreased to 1,047.28 tons. This means that in March, the ETF fund cumulatively net sold 52.78 tons of gold, setting a record for the largest single-month net selling since April 2013.

In addition, the world’s second-largest gold ETF under BlackRock, “IAU,” also cumulatively sold 22 tons of gold in March.

So why are they selling gold so urgently?

Why can’t they sit still?

From the perspective of the central banks involved, the most direct reason for selling gold lies in the “liquidity trap” in the market triggered by the Iran–U.S. war—forcing these central banks to shift from being loyal purchasers of gold to becoming the vanguard of gold selling.

Because Iran blocked the energy route through the Strait of Hormuz, oil prices surged. Since the beginning of this year, the price of Brent crude has already risen by 78.18%. And when international oil prices rise, global inflation expectations increase, prompting the Federal Reserve to make a major policy shift.

Before the war, the Federal Reserve’s core strategy this year had been rate cuts, meaning the U.S. dollar would weaken and currencies around the world would relatively strengthen.

Conversely, when oil prices spike, countries need to spend more U.S. dollars to buy oil. That pushes the U.S. dollar toward appreciation, while other currencies move from “appreciation expectations” to facing “depreciation risk”.

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To stabilize the exchange rate, central banks’ measures will inevitably require using more foreign exchange reserves. However, countries like Turkey and Poland have limited foreign exchange reserves to begin with, so they can only obtain U.S. dollar liquidity by selling gold.

A recent report from China United Securities Minsheng states that, taking Turkey as an example, the transmission path of the “foreign exchange reserves” versus “gold reserves” seesaw effect is: oil price supply shock → oil price rises → worsening current account imbalances → lira accelerates depreciation → central banks sell gold to increase foreign exchange reserves.

In a sense, this is another side of gold’s “safe-haven” function.

When an extreme crisis emerges, gold’s primary role shifts from “earning profits” to “converting into cash at high speed.” Turkey is a perfect example.

In fact, looking back historically, whenever a major crisis occurs, gold does not always play a safe-haven role; more often than not, it falls along with the market.

During the second half of 2008, when the subprime mortgage crisis fully erupted, the gold price crashed by 30% from 1,000 U.S. dollars per ounce to around 700. At that time, the S&P 500 index of U.S. stocks saw a drop of more than 40% in the same period, the subprime bond market had almost no trades, and the capital markets experienced an extreme liquidity crisis in U.S. dollars—so, “if bad assets can’t be sold, then gold is all that’s left to sell.”

Image source: Internet

The supply chain crisis triggered by global lockdowns in 2020: at that time, U.S. stock markets triggered circuit breakers four times within 10 days. The U.S. dollar index surged from 94.6 to 102.99, with a monthly increase of more than 8.8%. Meanwhile, the gold price also fell from 1,703.39 U.S. dollars per ounce on March 9, 2020, to as low as 1,451.05 U.S. dollars per ounce by March 20—its maximum decline in the range was 14.81%.

In that environment, only investors and institutions that have allocated gold could quickly exchange it for U.S. dollar cash in a crisis, getting through the harshest winter for the capital markets.

Just one small “sell-off”?

Do the “defection” of two pro-gold global central banks and the sell-off by two major global gold ETFs mean that the macro logic behind gold rising has fundamentally changed?

In a research report dated April 2, UBS strategist Joni Teves said bluntly: “This is unlikely.” Teves expects: in 2026, global central banks will purchase about 800–850 tons of gold, slightly lower than last year’s 860 tons.

The data provided in China United Securities Minsheng’s research report is more direct. It wrote: after the outbreak of the Iran–U.S. conflict, by March 2026, global central bank gold purchases reached 14.7 tons, of which the euro area was the “main buyer” for the month (43.1 tons). The amount of gold added by other central banks far exceeded the amounts reduced by Turkey and Russia. In summary, the “deleveraging/reduction” actions by central banks do not change the overall tone of “central bank gold purchases.”

There are also parts that can be questioned in the details.

Regarding Turkey’s selling behavior, UBS analysts believe Turkey’s gold transactions are not a direct sale of gold. Its approach is to use gold as collateral, then use gold financing to borrow dollars at low cost—this is a commonly used tool for central banks to respond to liquidity pressure.

JPMorgan economists, Fati赫·Akceлик, also pointed out: Turkey’s central bank holds about 30 billion U.S. dollars’ worth of gold reserves at the Bank of England, which can be used directly for trading in the London market. It is not constrained by logistics, thereby enabling rapid intervention in the foreign exchange market.

In addition, since 2017, Turkey has allowed banks and financial institutions to use gold more broadly within the system. This means that “changes in overall data” do not necessarily equate to “central bank selling gold into the market.”

From a longer perspective, the reason global central banks collectively buy gold is that their trust in U.S. Treasuries has weakened. Judging from current signs, the trend of weakening U.S. dollar credit does not appear to have been fundamentally reversed.

China United Securities Minsheng believes that if we compare the United States today to a company, then the U.S. dollar’s credit is the company’s “ability to pay its debts.” In 2025, the U.S. government’s leverage ratio exceeded 110%, and the trend of weakening dollar credit is continuing.

A weakening of U.S. dollar credit implies that global central banks’ demand for purchasing U.S. Treasuries is operating at a low level. Buying U.S. Treasuries is still not as attractive as buying gold.

Additionally, for countries such as China, Japan, and Singapore, the share of gold in total foreign exchange reserves is relatively low, so there is still significant room for further increases in holdings in the future.

Can gold still be bought?

In reality, some central banks’ decisions will affect gold’s price trajectory. But the core factors that determine the price of gold over the long term still are the U.S. dollar and real interest rates.

Gold is essentially a “non-yielding asset.” Even if you buy gold bars and put them in a safe, after 100 years you will not have gained an extra gram of gold.

That’s why the market has found a “pricing anchor” for gold: the yield on the 10-year U.S. Treasury.

In general, when U.S. Treasury yields rise, gold prices face pressure. When U.S. Treasury yields fall, gold prices tend to strengthen.

And the trajectory of the 10-year U.S. Treasury yield is influenced by monetary policy from the Federal Reserve.

On March 18, the Federal Reserve announced it would keep interest rates unchanged again

After the war broke out, inflation disturbances caused by geopolitical conflicts affected expectations for the Federal Reserve’s monetary policy. U.S. Treasury yields shifted from the prior downward trend to subsequent upward movement, which led to gold prices soaring and then falling back.

Finally, for ordinary investors: can gold-related investment products still be bought?

Wu Lixian, an international strategy analyst at Everbright Securities, said: gold’s price trend is closely related to the situation in the Middle East. If the fighting heats up over the next two weeks, gold prices may still be affected.

In addition, after gold prices rebounded from around 4,100 U.S. dollars to about 4,700, the cumulative rebound was relatively large. With prices in the short term at a relatively high level, investors may consider waiting for a pullback before making their allocations.

Zhou Junzhi, chief macro analyst at Citic Securities, believes: “The safe-haven role of precious metals is temporarily ineffective; we need to wait for clearer signals from the interest rate path. But the medium- and long-term logic for gold has not been broken. Once the liquidity impact on gold prices weakens, gold can resume its medium- and long-term logic.”

Overall, forecasting the market is ultimately a false proposition. As long as the macro narrative of “weakening U.S. dollar credit” and “global debt expansion” has not come to an end—and once local geopolitical conflicts or short-term speculation end—gold will eventually return to its most original mission: the re-pricing of monetary credit.

Or perhaps, just when most people doubt gold, is often when it sets off again.

Author | Wang Zhenchao | Editor | He Mengfei

Editor-in-chief | | He Mengfei | Image source | VCG, Internet

Author statement: personal opinions are for reference only