Gold’s Central Bank Schism: Ankara Dumps 127 Tonnes as Beijing Keeps Buying

Gold trades 10% below pre-Iran conflict levels as central banks sell, oil surge fuels rate hike fears, and Fed decision looms.

The gold market is being torn apart by two competing forces that rarely coincide: a breakdown in the long-standing central bank buying consensus and a geopolitical oil shock that would normally send prices soaring. The result is a precious metal caught in a stagflationary trap, trading at roughly $4,709 per ounce — 10 percent below where it stood when the Iran conflict erupted nine weeks ago.

Last week alone, gold shed more than 2 percent, a decline that defies the traditional safe-haven playbook. The Strait of Hormuz blockade, described by the International Energy Agency as the biggest energy supply shock in history, has driven Brent crude into a historic backwardation and pushed WTI above $96 a barrel. Yet gold has failed to benefit, because the same inflationary pressures that should support it are now working against it.

The mechanism is straightforward: surging energy costs stoke inflation expectations, which in turn fuel fears of interest rate hikes. For an asset that generates no yield, rising rates are toxic. The very inflation that gold is supposed to hedge against has become its primary headwind.

The Turkish Liquidation

Adding to the pressure, central banks — long considered the bedrock of gold demand — are suddenly acting as sellers. The most dramatic shift comes from Turkey. The central bank in Ankara has offloaded or lent roughly 127 tonnes of gold in recent weeks, much of it used as collateral for currency swaps to secure much-needed dollar liquidity. The lira is under severe strain as rising energy prices from the Iran conflict hammer the import-dependent economy.

The impact on Turkey’s balance sheet is stark. The value of its national gold reserves collapsed by nearly a quarter month-on-month to $101.5 billion. Russia has also been selling portions of its holdings, though Moscow’s motivation is different: it is using elevated precious metal prices to help finance the state budget rather than to stabilize its currency.

China Buys Into the Dip

The selling has not triggered a total rout, because Asian central banks continue to step in. The People’s Bank of China recently reported its 17th consecutive month of purchases, pushing its reserves above 2,300 tonnes. This cross-Pacific divide — Eastern buying versus Western selling — is creating a fractured market where price discovery becomes increasingly difficult.

The World Gold Council confirms that central banks bought a net 27 tonnes in February alone, marking the 23rd consecutive month of net purchases. Poland led the list with 20 tonnes, bringing its reserves to 570 tonnes. But the Turkish and Russian sales are large enough to distort the aggregate picture.

Fed Decision Looms

The next major catalyst arrives this week. The Federal Reserve meets on April 28-29, and gold has become acutely sensitive to monetary policy signals. Any hint of a hawkish tilt — driven by oil-induced inflation — could push prices lower. Conversely, dovish language could reignite the rally.

Analysts are split on the outlook. Goldman Sachs holds firm on its year-end target of $5,400, citing monthly central bank buying of roughly 60 tonnes and expectations of two more US rate cuts. State Street Global Advisors sees a base case range of $4,750 to $5,500, but assigns a 30 percent probability to a bullish scenario reaching $6,250.

Morgan Stanley has taken a more cautious stance, cutting its second-half target to $5,200. The divergence reflects the unusual nature of this cycle: supply-side selling from central banks is colliding with demand-side buying from others, while macro conditions that would normally support gold are instead suppressing it.

The Silver Spillover

The same dynamics are hitting silver even harder. Despite a Friday bounce, the white metal lost nearly 7 percent on the week, trading around $79.76 per ounce. That still represents a gain of more than 128 percent year-on-year, underlining the enormous momentum built up in recent months.

HSBC estimates the silver market faces a deficit of roughly 126 million ounces in 2026, marking the sixth consecutive year of shortfall. Global inventories have shrunk by 762 million ounces since 2021. On the demand side, China’s solar boom is a key driver: the country increased new photovoltaic installations by 34 percent early this year.

Analysts at ING Markets and other leading houses see a clear path to $100 per ounce, provided support around $72 holds. Some technical analysts have even flagged targets near $120, though they warn that significant correction pressure would build at those levels.

The Hormus Variable

For both gold and silver, the Strait of Hormus remains the single most important variable. A diplomatic resolution that reopens the waterway would ease oil prices, reduce inflation fears, and restore hopes for rate cuts — all of which would be bullish for precious metals. Goldman’s year-end target of $5,400 and J.P. Morgan’s $6,300 forecast both assume some form of de-escalation.

But the diplomatic track remains fraught. Iranian Foreign Minister left Pakistan on Sunday without meeting US representatives after President Trump ordered talks suspended. Prices briefly dipped on reports of a new Iranian proposal to reopen the strait via Pakistani mediators, but the underlying impasse persists.

Even if a deal materializes, analysts warn that normalizing oil flows could take months. The ongoing US naval blockade of Iranian exports remains the central obstacle. Until it is resolved, gold will remain trapped between its safe-haven heritage and the punishing logic of stagflation.