Despite lower gold prices, broad-based central bank buying has paused. The macro risks from the US-Iran conflict, which may require central banks to defend their currencies, have disrupted typical buying patterns. This has narrowed the pool of active purchasers, leaving only a few nations like China and Poland as aggressive 'dip buyers'.
Data reveals a divergence between LNG loaded onto vessels in Qatar and the few ships actually exiting the Strait of Hormuz. This signals a major transit bottleneck, not a supply recovery. Continued restrictions heighten the risk of production shutdowns that could extend into the critical winter demand season, threatening global supply.
The structural trend of central banks diversifying away from the US dollar is evidenced by a key metric: US Treasuries held in the Fed's custodial accounts for foreign officials have fallen to their lowest point since 2012. This indicates a tangible, ongoing shift in reserve management strategy that underpins long-term demand for gold.
Central banks often target gold holdings as a percentage of total reserves. When gold's price falls, its value as a share of their total portfolio shrinks. This creates a formulaic demand driver: to restore their target allocation, they must purchase a larger physical quantity (tons) of gold at the lower price, creating a structural support for demand.