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Gold’s Second Act

A record high, a hard policy reversal, and India quietly unwinding a decade-long experiment.

Gold set an all-time high above $5,500 an ounce on 28 January 2026 — a number that would have read as fantasy three years earlier. It then spent much of the following six months giving a substantial portion of it back, trading around $4,344 by mid-August: roughly 22% below the peak, and still up about 31% over twelve months.

A volatile chart. What makes it interesting is who was buying on the way down.

The central bank bid

Official institutions purchased 244 tonnes in the first quarter of 2026 — the highest single-quarter value on record — and kept buying through the price decline. The World Gold Council’s ninth annual survey of reserve managers found 89% expecting global central bank gold reserves to rise over the following twelve months, and a record 45% expecting their own institution’s holdings to increase.

This is the structural story, and it is not a trading position. Gold now accounts for a larger share of central bank reserves than US Treasuries for the first time since 1996 — a reallocation at the level of national policy, reserve managers deliberately reducing single-currency exposure.

India reverses course

On 13 May 2026, the Indian Finance Ministry raised the import duty on gold and silver from 6% back to 15%, undoing the cut made in the 2024 Budget. The cut had worked exactly as intended, and that was the problem: gold imports surged in value to a record $71.98 billion in FY2025–26, even as volumes dipped, blowing out the import bill precisely when the rupee was under pressure from energy costs. India has now completed a full policy cycle — cut, surge, reverse — in under three years.

The bond unwind

Behind the duty story sits a quieter one. The Sovereign Gold Bond scheme, launched in 2015 to move household savings out of physical metal, has effectively been paused — no issuance calendar has been published for FY2026–27. Investors in the earliest tranches have redeemed at gains exceeding 200%, tax-free, plus 2.5% annual interest. An instrument designed to reduce the cost of India’s gold habit became, in a bull market, an extremely expensive sovereign liability. Where that redeemed capital goes next is a genuinely open question, and one receiving far less attention than it deserves.