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Although some central banks have started liquidating gold holdings, these actions are primarily “tactical” and “temporary,” and there is no indication of a broader trend forming, analysts said. Nonetheless, the ongoing situation in the Middle East warrants close attention, as sustained high oil prices could potentially trigger a wave of gold sales.
“Countries that depend heavily on crude oil, maintain low foreign exchange reserves, and hold a significant portion of their reserves in gold are most at risk of selling,” a trader explained. This comes amid recent moves by various central banks to reduce their gold holdings in response to energy shortages and currency devaluation pressures stemming from conflicts in the Middle East.
For instance, the Central Bank of Turkey sold nearly 120 tons of gold over the two weeks leading up to March 28, based on data released on April 2. Poland’s central bank also announced plans earlier this month to sell part of its gold reserves to raise approximately USD 13 billion for defense spending. Meanwhile, Russia’s central bank sold 15 tons of gold during the first two months of the year, according to the World Gold Council.
These sales by Turkey, Poland, and Russia are largely driven by short-term political and economic motives, such as following market trends and temporarily alleviating fiscal pressures. Importantly, these moves do not alter the fundamental long-term drivers of gold prices, such as the waning confidence in the U.S. dollar and increasing central bank gold acquisitions.
Turkey’s gold reserves declined by 69.1 tons in the week ending March 28, with a total two-week reduction of 118.4 tons, bringing the country’s reserves to 702.5 tons. The majority of this decline involved gold-for-foreign-exchange swaps—using gold as collateral to obtain U.S. dollars, which are later redeemed.
Since the escalation of conflicts involving the U.S., Israel, and Iran, the dollar index has surged, causing the Turkish lira to repeatedly hit historic lows against the greenback, with one point reaching 44.35 to the dollar. This has led to significant capital outflows from Turkey’s stock and bond markets. Additionally, Turkey imports around 90 percent of its crude oil, and with oil prices exceeding USD 100 per barrel, energy costs have risen sharply.
The surge in oil prices has worsened Turkey’s current account deficit, accelerated the depreciation of the lira, and compelled the central bank to sell gold for foreign exchange, creating a seesaw dynamic between its foreign reserves and gold holdings, according to analysts.
This large-scale gold selling sharply contrasts with Turkey’s active gold accumulation over the past four years, during which the central bank added 325 tons of gold, increasing reserves to 603 tons by the end of last year—a valuation of roughly USD 135 billion.
Looking at the bigger picture, central banks have been major buyers of gold over the past four years. From 2022 to 2024, they purchased an average of over 1,000 tons annually—about twice the previous decade’s yearly average. Even in 2025, when gold prices reached record highs, central banks still bought approximately 863 tons, representing around 17.3 percent of global demand that year.
Although some central banks have recently reduced their holdings, the overall trend of net gold purchases remains intact. In February alone, central banks added 19 tons to their holdings, according to the latest Central Bank Gold Buying Report. While this is below the average monthly purchase of 26 tons in 2025, it still marks a significant increase from January’s net addition of five tons.
According to a strategist at a major international bank, a fundamental shift or widespread gold sales by central banks are very unlikely. This year’s total gold purchases are projected to reach about 800 to 850 tons, slightly lower than in 2025, suggesting a slowdown rather than a reversal of recent trends.
Forecasts indicate gold prices could rise to around USD 5,400 per ounce by year’s end. However, geopolitical developments in the Middle East remain a critical factor. Prolonged damage to energy infrastructure could stabilize or even depress gold prices, while a rapid decrease in energy costs might reignite central bank demand for gold.
Alternatively, easing geopolitical tensions, looser monetary policies, or supply shocks could enhance demand for safe-haven assets like gold, boosting prices further, according to research from a major financial firm.
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