For years, the consistent purchasing of gold by central banks provided a foundational pillar of support for the market. That dynamic is now showing signs of reversal. Significant sales by Russia and Turkey are introducing fresh uncertainty, potentially undermining a core narrative that has driven the multi-year rally in gold prices.
Following a steep decline of over 13% in March, the price of gold has recently stabilized near $4,774 per ounce. A recovery of approximately 1.4% today is being fueled by signals of a potential de-escalation in the Iran conflict. US President Trump suggested that attacks on Iran could cease within two to three weeks, regardless of whether a formal agreement is reached.
Liquidating Reserves Out of Necessity
The recent sales activity follows a clear and pragmatic logic. Faced with growing budget shortfalls, Russia’s central bank offloaded 500,000 ounces in January and February alone, reducing its reserves to a four-year low. Meanwhile, Turkey sold and swapped an estimated 50 to 60 tonnes of gold amid the Iran war, primarily as a tool for short-term market stabilization.
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Analysts at Natixis identify a structural pattern behind these moves: central banks are increasingly tapping their gold reserves to finance emergency energy purchases and cushion the impact of rising oil prices on their domestic currencies. Market observers are paying particularly close attention to institutions in Asia and the Middle East—regions previously considered the primary engines of global gold demand.
Bullish Price Targets Remain Unchanged
Despite these developments, major financial institutions have not revised their optimistic year-end forecasts. JPMorgan maintains a price target of $6,300 for gold, while UBS anticipates $6,200. Goldman Sachs presents a more conservative estimate of $5,400. All three firms base their assessments on expectations of continued central bank demand, potential interest rate cuts by the US Federal Reserve, and elevated geopolitical uncertainty.
It is precisely the first of these supporting factors—ongoing central bank demand—that now faces pressure. As long as conflict in Iran drives up energy costs and forces affected economies to liquidate reserves, the strength of the buyer side remains in question. Whether it will be sufficient to justify these bullish annual targets is unclear. The next significant directional move for gold will likely hinge on the concrete details emerging from President Trump’s forthcoming address on the situation in Iran.
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