Who is reducing their gold holdings?

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Since 2026, the international gold price has once again entered record-high territory. As of March 26, 2026, the Chicago Options Exchange Gold ETF Volatility Index (VIX) has reached 45.07%, while during the outbreak of the Russia-Ukraine conflict, the index peaked at 31.7%; when the United States issued so-called “reciprocal tariffs,” the index’s highest value was 28.44%; when the U.S. government shut down, it was 32.78%. The current volatility range of the international gold price is already significantly higher than those at major time nodes in recent years. After the international gold price moved into the high range of $4,500 per ounce, increased volatility has gradually become the norm for the gold market.

If we take 2024 as the starting point of this round of the gold bull market, the gold bull run has continued for more than two years. If we also include the atypical gold bull market period after the Russia-Ukraine conflict in 2022, the gold bull market has lasted four years. In such a market, the gold market has accumulated a large amount of take-profit positions. Crowded trading plus leveraged capital causes gold to switch frequently between sharp rallies and sharp sell-offs. Faced with the gold price at historical highs and volatility rising, has the logic of the gold market already been broken? Who is selling gold? How have gold investors’ behaviors—such as central banks and ETF capital—played out?

First, are central banks around the world reducing their holdings of gold? Judging from the trend in changes to global gold reserves, international gold allocation holdings overall have increased year by year. Global central banks purchased more than 1,000 tons of gold for three consecutive years from 2022 to 2024, which is double the average gold purchases of the previous decade (about 500 tons). In 2025, when the international gold price was at record highs, global central banks still bought 863 tons. From the structure of global gold demand, in 2025 total global gold demand was 5,002.3 tons, and the share of gold demand from central banks and official sources was 17.26% of total demand. Investment demand and gold jewelry manufacturing accounted for 76.23%. These two categories are mainly market-driven entities; they are more sensitive to gold price movements and gold investment returns, and they also trade more frequently. Therefore, in theory, the marginal direction of gold volatility and price trends mainly depends on this portion of market-driven demand.

Among the official global reserves, the top 15 countries by gold positions can roughly be divided into four categories. First, countries whose gold positions held since 2009 have remained unchanged (such as the United States, the UK, Italy, and Switzerland). Second, countries that continue to steadily add to their gold holdings (such as the BRICS countries). Third, countries that reduce gold reserves slightly, with Germany being the most representative example. Germany is the world’s second-largest gold reserve country, and the German authorities have been continuously trimming gold in small amounts each year between 2002 and 2025. Fourth, countries with large inflows and outflows of gold reserves—Turkey mainly fits this description. Because Turkey is a major gold-reserve country globally, large sell orders or buy orders in a given month can become a marginal driving force influencing the international gold market. The data shows that currently, the Turkey central bank has been selling gold for two consecutive months. Worth noting is that Turkey is a country that heavily depends on energy and electricity imports, with its energy import dependency consistently around 70%. Amid instability in the Middle East, it is common sense that the Turkey central bank’s moderate reduction of gold holdings to ease domestic and international economic pressure fits the situation.

Second, are investors reducing their holdings of gold? For market investors, the biggest concerns are gold’s investment returns, holding experience, and opportunity cost. After the international gold price hit a new high on March 2 and then retreated, the amount of gold held by gold ETFs also declined, indicating that gold investors were redeeming. Between March 2, 2026, and March 26, 2026, the holdings of the world’s major gold ETFs—SPDR Gold ETF, iShares Gold ETF, PHAU Gold ETF, and SGBS Gold ETF—were reduced by 48.63 tons, 25.92 tons, 1.11 tons, and 0.26 tons, respectively, showing that market investors took profits after the gold price fell sharply. In addition, as the gold ETF volatility mentioned above rose significantly, the sense of gains for gold ETF holders gradually worsened, so redemptions of gold ETFs increased further. This in turn means that gold investment institutions also had to reduce their gold positions accordingly.

Regionally, in 2025 the size of physically backed gold ETFs supported globally increased quarter by quarter. But unlike other regions, Europe’s gold ETF holdings had already begun to be reduced in the fourth quarter of 2025 (down 17.23 tons in Q4 2025 compared with Q3). In the same period, gold ETFs in North America and Asia increased by 99.88 tons and 89.98 tons, respectively. This suggests that the main source of sell-side pressure in gold during this phase came from European ETF funds.

Third, are Middle Eastern sovereign wealth funds dumping gold? There is no doubt that Middle Eastern Gulf sovereign wealth funds are among the most important pools of capital globally. The U.S.-Israel-Iran war in the Middle East has a major impact on regional security conditions, and therefore sovereign wealth funds in the Middle East may also—due to various reasons—reduce holdings of gold or gold ETFs, becoming the sell-off force for this round of gold adjustment. In March 2026, the UAE central bank reduced its gold holdings by 0.85 tons, which is the country that officially disclosed a reduction in gold reserves in the Middle East.

However, at present there is no evidence that other parts of the Middle East are massively selling gold. According to materials from the Economic and Commercial Office of the Chinese Embassy in the Kingdom of Saudi Arabia, Middle Eastern sovereign wealth funds mainly include seven major institutions: the Abu Dhabi Investment Authority (ADIA), the Saudi Arabia Public Investment Fund (PIF), Qatar Investment Authority (QIA), Mubadala Investment Company (Mubadala), Abu Dhabi Development Holding Company (ADQ), Kuwait Investment Authority (KIA), and Dubai Investment Company (ICD). These funds aim for long-term returns, diversify their asset categories, and mainly allocate to global stocks and bonds, private equity, real estate, infrastructure, and alternative investments, while also increasingly focusing on allocations in areas such as technology and new energy.

Taking the Abu Dhabi Investment Authority as an example: according to the company’s website, its investment portfolio mainly consists of: developed market equities (32%—42%), emerging market equities (7%—15%), small-cap stocks (1%—5%), government bonds (7%—15%), credit bonds (2%—7%), financial substitution solutions (5%—10%), real estate (5%—10%), private equity (12%—17%), infrastructure (2%—7%), and cash (below 5%). It can be seen that the investments mainly involve primary-market equity funds, secondary-market stocks, and so on, and do not include information about gold and ETF holdings.

Finally, with ongoing geopolitical conflicts and international oil prices staying high, the market is preparing for the worst-case scenario: the possibility that within the year the U.S. Federal Reserve hikes rates, that dollar liquidity tightens, and that the U.S. Treasury yield curve further steepens. In addition, as of March 24, COMEX gold’s total open interest has fallen by 403,900 contracts from its intrayear high (January 20). The ratio of COMEX non-commercial long positions to short positions is 4.2 times, and the ratio of COMEX commercial long positions to short positions is 0.27 times. This indicates that non-commercial longs are overly crowded, while there are too many commercial short positions—reflecting that the sell-side strength from commercial hedging/usage demand for gold is relatively large, and that non-commercial gold faces a comparatively higher risk of physical delivery.

Since the tension in the Middle East, crude oil prices and the U.S. dollar index have both risen, yet gold prices have fallen. This reflects the allocation logic of “cash is king” under “stagflation.” During the global COVID-19 period, a similar situation occurred as well, where liquidity demands became the overwhelming factor, leading to the situation where “safe-haven asset” gold declined.

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Editor: Zhao Siyuan