Central banks are returning to the gold market in force, adding another layer of support to prices and potentially strengthening the investment case for gold miners whose valuations may not yet reflect a higher-for-longer price environment.

Central banks added a net 289 tonnes of gold during the second quarter of 2026, according to the World Gold Council, a record for the quarter and 62 per cent higher than a year earlier.

The rebound was more than five times the level of central-bank net demand recorded during the first quarter, challenging earlier concerns that official-sector buying was beginning to retreat as gold prices climbed.

For gold equities, the significance may lie not simply in the volume being purchased, but in what renewed buying indicates about price support.

Global asset manager Ninety One natural resources portfolio manager George Cheveley said central banks had demonstrated that they remained committed to accumulating gold while also being sensitive to price.

“If that demand is putting a floor under gold around these levels, the implications for gold miners could be significant – particularly when consensus expects the gold price to move considerably lower,” Cheveley said.

Poland added 51 tonnes during the quarter, while China purchased 33 tonnes.

China is particularly important given it accounts for around one-third of annual gold demand. BMO analysis suggests the country’s central-bank holdings could already exceed 5200 tonnes, more than double its officially reported figure.

Gold’s role in reserve diversification has also become more prominent since Western governments froze Russian US dollar assets following Russia’s invasion of Ukraine.

The average share of gold in central-bank reserves has increased from 14 per cent to 25 per cent in two years, although some of that increase reflects higher gold prices.

“Gold has several characteristics that remain attractive to central banks: it is highly liquid, acts as a long-term inflation hedge and, critically, does not carry another country’s credit risk,” Cheveley said.

“For countries looking to diversify their reserves, those characteristics are difficult to replicate.”

For resources investors, the key question is whether sustained official-sector demand helps establish a structurally higher gold-price environment than currently embedded in expectations for mining companies.

If prices remain near current levels over coming years, gold mining could remain extremely profitable and potentially outperform current consensus expectations.

Early October has seen gold prices dip a little from $US4280 to $US4120 but the the longer-term outlook nevertheless remains supported by structural demand drivers.

That argument is reinforced by State Street Investment Management, which sees broader structural support for gold remaining intact.

Gold entered August below $US4100 per ounce before climbing as high as $US4650–4700, ultimately finishing the month around $US4400. Spot gold gained nearly 10 per cent during August, its strongest monthly increase since January.

State Street head of gold strategy Aakash Doshi and his team believe the August rebound established an important base.

“Though gold market gains lost steam entering September, the August rebound in spot price was critical to establishing $US4000/oz as a firmer support level and putting $US5000/oz back in play over the next 6 months,” the strategists said.

Importantly, investment demand has also broadened.

Global gold-backed exchange-traded funds attracted $US17.1 billion during August, taking year-to-date inflows to $US27.7 billion. European funds attracted $US7.7 billion and US funds $US7.5 billion.

Chinese non-monetary gold imports, meanwhile, reached a record 1000 tonnes during the first seven months of 2026, up 78 per cent year-on-year despite local gold prices averaging approximately 45 per cent higher.

Together, central-bank accumulation, Chinese demand and renewed Western ETF investment provide multiple potential pillars beneath the gold price.

For gold equities, that matters because sustained prices at current levels could translate into strong margins and cash generation, particularly alongside improved capital discipline.

The emerging investment question may therefore be less about whether gold can continue setting new highs and more about whether miners are being valued against an overly conservative long-term gold price.

As Doshi and his team put it: “The gold allocation implication is diversification, not a rate call.”

If central banks continue treating gold as a strategic reserve asset and provide a floor beneath prices, gold miners may increasingly offer investors leveraged exposure to a structural shift that has yet to be fully reflected in equity valuations.

READ MORE: Gold’s great consolidation – what investors should watch

Subscribe to Australian Resources & Investment and receive the latest news on commodity prices, resource developments, executive movements and more.