#GoldAndSilverMoveHigher People's Bank of China (PBOC) continued its gold purchases for the 16th consecutive month in February. Increasing geopolitical tensions in the Middle East are directing investors toward safe-haven assets. Central banks are continuing to strengthen their reserves in this environment.

Geopolitical tensions boost gold demand
Gold recently surpassed the $5,000 level. Behind this rise is the deterioration of the global security environment. The US and Israel conducted joint military operations against Iran targets. Following this development, investors exited risky stocks and aggressively shifted to defensive positions.

Global central bank purchases showed seasonal slowdown in January. Banks bought an average of only five tons of gold, compared to an average of 27 tons per month last year. Analysts believe that the accumulation of oil shocks and regional instability will continue. This trend is expected to persist through 2026.

Marissa Salim, an analyst from the World Gold Council, made the following assessment: "Volatile prices and the holiday season may have paused some central banks." Salim emphasized that geopolitical risks do not show signs of decreasing. This will keep corporate appetite high. In the ETF market, US-based gold ETFs recorded a net inflow of $4.5 billion in February. This figure indicates that retail and institutional investor sentiment aligns with central bank activity.

Reserves differentiation and liquidity needs
The bullion gold market is witnessing a clear divergence in central bank strategies. A broader accumulation trend is being managed by East Asian and Central European countries. Poland’s central bank was previously one of the most aggressive buyers. Recently, the bank proposed selling part of its reserves to finance urgent domestic defense spending.

Russia and Venezuela’s central banks have also recently appeared as sellers. These countries are likely trying to strengthen liquidity due to tightening sanctions. Economic isolation is also fueling this situation.

The USD/CNY exchange rate remained relatively stable during the announcement, at around 6.8968. However, PBOC’s consistent gold purchases indicate a long-term strategic shift. China is thus trying to hedge against currency volatility.

Analysts at J.P. Morgan currently forecast that gold prices will average $5,055 by the end of 2026. The persistent accumulation of central bank demand forms the primary base for the market. Although changes in US monetary policy cause short-term volatility, this situation is expected to continue.

INVESTMENT ADVICE IS NOT PROVIDED

()$BTC