‍#Gate广场四月发帖挑战

Turkey leads multiple countries in heavy selling—Is gold no longer attractive?

For a long time, central bank gold holdings have been seen as the foundation of this gold bull market. However, this ballast for rising gold prices may now be unstable. In response to energy supply shortages caused by Middle East conflicts and the depreciation pressure on the Turkish lira, Turkey’s gold reserves have decreased significantly by nearly 120 tons over the past two weeks, the largest two-week decline since records began in 2013, bringing Turkey’s total gold reserves down to 702.5 tons.

Additionally, on March 4, the Governor of the Polish Central Bank proposed raising approximately $13 billion for defense spending by selling part of its gold reserves;

Russia’s central bank announced in February that it sold 300k ounces of gold in January, reducing its total gold holdings to 74.5 million ounces. This is the first decrease in Russia’s gold reserves since October last year.

👉 Why reduce holdings?

Besides the high gold prices, most countries are selling gold either to reduce positions at high levels or as a forced measure to obtain liquidity amid high inflation and high interest rates. Take Turkey as an example: soaring international oil prices have directly increased Turkey’s foreign exchange payment pressures, while market risk aversion has risen, causing the Turkish lira to face devaluation risks. To stabilize the currency and boost market liquidity, Turkey’s central bank has had to dip into its gold reserves.

It’s worth noting that of the gold reserves reduced last week, about 26 tons were sold, and approximately 42 tons were used for swap transactions. Swap transactions essentially involve “exchanging gold for foreign currency, redeemable at maturity,” meaning the central bank hands over gold to a counterparty in exchange for an equivalent amount of dollars, while also signing a forward contract to buy back the gold at a slightly higher price in the future. This is a form of short-term financing, not permanent liquidation.

👉 How does this affect gold prices?

(1) Short-term downward pressure on international gold prices
The gold sales by multiple central banks have exerted clear downward pressure on international gold prices. Since the outbreak of Middle East conflicts, spot gold has experienced intense volatility, briefly entering a bear market zone. The latest close was $4,672.02 per ounce, showing a significant retreat from previous highs. However, geopolitical uncertainties remain, and the safe-haven demand for gold has not disappeared entirely, leading to a choppy price trend.
(2) Concerns over long-term strategic shifts

For countries like Turkey that have long pursued “de-dollarization,” reducing gold reserves is largely a helpless move. While this operation temporarily alleviates liquidity pressures, it may also weaken the strategic gains of de-dollarization. In the future, if the global economic environment improves, these countries might resume increasing their gold holdings. But the current wave of selling has shown that under extreme pressure, the “strategic attribute” of gold reserves still must give way to practical economic needs.

👉 What are the strategies for gold operations?

Regarding gold, the Little Wealth God believes that the long-term bull market fundamentals remain intact. Central banks’ gold sales are also partly out of necessity and do not represent a fundamental change in attitude toward gold. For gold trading, a “long bullish, short bearish” strategy can be adopted: short-term profits by shorting above 4600, and long-term opportunities for long positions above 4100.