Who Is Buying Gold?
Central banks are increasing their gold reserves, while investment funds have attracted record inflows despite falling prices. Their reasons for buying differ, as do the implications for private investors considering gold as part of a diversified portfolio.
Gold has lost approximately 7% since the beginning of September, falling to around US$4’100 per troy ounce by 8 October, according to LSEG data. Higher bond yields and a stronger dollar have weighed on prices, although purchases by central banks and investment funds have continued.
The World Gold Council recorded net central-bank purchases of 289 tonnes in the second quarter of 2026, 62% more than a year earlier. Investors also committed a record US$31 billion to gold-backed exchange-traded funds between July and September, even as higher interest rates increased the appeal of interest-bearing securities.
Behind the buying lie different priorities. Reserve managers want to reduce their dependence on particular currencies and financial institutions, while private and institutional investors are responding to economic uncertainty, interest rates and movements in other markets. The recent fall in gold prices shows that even substantial demand cannot prevent losses when market conditions turn against the metal.
Gold trades internationally in US dollars, while its return in a Swiss portfolio depends on its value in francs. Investors must also decide whether to hold bullion directly, buy a gold-backed fund or invest in mining companies.
Why Central Banks Keep Buying Gold
The World Gold Council recorded net central-bank purchases of 289 tonnes in the second quarter of 2026, up from 178 tonnes a year earlier. Poland led the reported buying, adding 51 tonnes and increasing its reserves to 632 tonnes by the end of June. China purchased another 33 tonnes, taking its holdings to 2’346 tonnes, while Uzbekistan and Kazakhstan added 16 and 15 tonnes respectively.
Buying was less consistent during the first half as a whole. Following revisions to earlier estimates, the World Gold Council reported net purchases of 345 tonnes for the six months, the lowest comparable figure since 2022. Sales by several central banks earlier in the year had reduced the total.
Reserve managers hold gold partly because it does not depend on another institution meeting its payment obligations. Government bonds expose the holder to the creditworthiness of the issuer, whereas physical bullion can be held independently of the countries whose currencies dominate international reserves.
Concerns about government borrowing and geopolitical tensions have increased interest in that independence. In the World Gold Council’s 2026 survey, 89% of reserve managers expected global central-bank gold holdings to increase over the following year, while 45% intended to expand their own reserves.
Gold comes with costs that government securities do not necessarily share. It produces no interest income, requires secure storage and can lose substantial value over relatively short periods. Central banks must weigh those disadvantages against the protection offered by holding an asset outside the conventional debt markets.
Purchases by reserve managers may absorb some selling pressure, but their influence has limits. September’s price decline occurred despite continued central-bank demand, as higher bond yields and currency movements encouraged other investors to reduce their exposure.
The pattern of buying also varies according to how much gold a country already holds. Some central banks are still building their reserves, while others have maintained substantial positions for years.
Switzerland Has Kept Its Gold Holdings Unchanged
The Swiss National Bank (SNB) holds 1’040 tonnes of gold, a quantity that has remained unchanged since the end of 2008. Changes in the market price have nevertheless produced large gains and losses in the value of its reserves.
In 2025, the SNB recorded a CHF 36.3 billion valuation gain on gold as the price rose by 45.9% in Swiss-franc terms. The first half of 2026 brought a CHF 6.4 billion valuation loss after the price declined from CHF 110’919 to CHF 104’812 per kilogram.
The SNB did not need to buy or sell any gold for either change to occur. Approximately 70% of its holdings are stored in Switzerland, with another 20% at the Bank of England and 10% at the Bank of Canada. Maintaining reserves in several locations allows the central bank to retain access to gold under different financial and political circumstances.
The SNB manages its holdings as part of Switzerland’s monetary reserves, rather than to generate investment returns for private clients. Its long-standing position reflects responsibilities that differ from those of wealthy families, which must also provide for spending, inheritance, investment income and future distributions.
Private investors may be willing to hold gold for decades, but their need to access capital can change considerably during that period. The way they own and store the metal therefore deserves as much attention as their intended holding period.
Investment Funds Are Buying for Different Reasons
Investment funds have been less consistent buyers than central banks. Their holdings respond more readily to interest rates, currency movements and expectations about future prices.
During the second quarter of 2026, investors withdrew approximately 45 tonnes from global gold-backed exchange-traded funds. Higher bond yields and changing expectations for monetary policy reduced demand, particularly in North America.
Purchases resumed during the third quarter, when global gold ETFs attracted US$31 billion between July and September. European and North American funds accounted for much of the buying, while UK-listed products recorded their strongest quarterly inflows on record.
According to the World Gold Council, global ETF holdings reached 4’256 tonnes at the end of September, also a record. The inflows continued as prices declined. Gold lost 8.5% in US-dollar terms during September, when the ten-year US Treasury yield rose by 53 basis points to approximately 5.3%. The dollar strengthened over the same period. By 8 October, Handelsblatt reported that gold was trading around US$4’100 per troy ounce, approximately 7% below its level at the beginning of September. The figures refer to different observation dates and price comparisons.
Higher yields increase the income investors can earn from government bonds instead of holding bullion, which pays no interest. A stronger dollar also makes gold more expensive for buyers using other currencies.
Investors nevertheless continued adding to their ETF positions. Concerns about public borrowing and financial instability may have contributed to the demand, particularly in the United Kingdom, where the World Gold Council identified exceptionally strong inflows.
Fund purchases are only one source of demand. Futures trading, physical bullion transactions and sales by other investors also influence prices, allowing gold to fall even when ETF holdings are increasing.
Some fund investors may be buying after the correction in anticipation of a recovery. Others may be increasing long-term allocations or seeking protection from risks elsewhere in their portfolios. The inflows establish how much capital investors committed, but reveal little about the returns they will ultimately earn.
What Higher Interest Rates Mean for Gold
Government bonds provide interest payments and a contractual claim to repayment at maturity, subject to the issuer meeting its obligations. Gold offers no comparable income, leaving investors dependent on changes in its market price.
When inflation-adjusted bond yields rise, the income forgone by holding gold increases. Investors can earn more from fixed-income securities without accepting the same exposure to fluctuations in bullion prices.
Gold has nevertheless attracted buyers concerned about risks beyond the level of interest rates. Large government deficits, uncertainty about future inflation and geopolitical tensions can increase demand for assets held outside conventional debt markets.
Central banks consider these risks when managing national reserves, often over several decades. Private investors must weigh them against the income available from bonds, the growth potential of equities and their own need for cash.
Gold’s recent correction illustrates how quickly market conditions can change. Central-bank purchases and strong ETF inflows coincided with falling prices as rising yields and a stronger dollar put pressure on demand elsewhere.
Its usefulness as a portfolio diversifier also varies. Gold does not always move in the same direction as equities and bonds, but it has experienced substantial declines during financial crises, including periods when investors sold liquid assets to raise cash.
The size of the holding determines how much those movements affect the wider portfolio. Investors with substantial gold positions can experience considerable losses even when their reasons for owning it remain unchanged.
Physical Gold, ETFs or Mining Shares?
Swiss investors can buy bullion, hold gold-backed exchange-traded products or purchase shares in mining companies. The choice affects ownership rights, ongoing expenses, liquidity and the risks they assume.
Physical Gold
Buying bullion allows an investor to own the metal directly, provided the purchase and custody arrangements establish clear legal title.
Swiss banks and specialist vault operators offer storage services, including facilities for individually allocated holdings. Investors should establish whether identifiable bars belong to them or whether they hold a contractual claim against a provider for a specified quantity of gold.
The difference becomes consequential if the institution encounters financial difficulties. Properly allocated bullion may remain legally separate from the custodian’s assets, while an unallocated gold account can expose the holder to the provider’s creditworthiness.
Physical ownership also involves storage, insurance and transaction expenses. Smaller bars and investment coins generally carry higher premiums relative to their gold content than larger bullion bars, increasing the amount by which the market price must rise before an investor recovers the purchase cost.
Qualifying investment gold, including certain bars meeting the prescribed purity requirements, is exempt from Swiss VAT. Other products may receive different treatment.
Investors using professional custody should establish where their gold is held, whether they can withdraw it, how much notice the provider requires and what they would pay to transfer or sell their holdings.
Gold ETFs and Exchange-Traded Products
Gold-backed funds allow investors to obtain exposure through a securities account without arranging their own physical storage.
Many hold bullion and seek to follow the gold price after deducting management expenses. Exchange trading generally makes purchases, sales and portfolio rebalancing more straightforward, although investors still pay fund charges, brokerage fees and bid–ask spreads.
The legal arrangements are not identical across Swiss-listed gold products. Some investors own units in a collective investment scheme, while others hold securities issued by a financial institution.
The structure determines the investor’s rights to the underlying assets and can affect their position if an issuer or intermediary becomes insolvent.
Currency arrangements require similar scrutiny. A product quoted in Swiss francs does not necessarily protect its holder from movements in USD/CHF. Currency-hedged products can reduce that exposure, although the protection introduces costs and may change the investment’s performance.
Before purchasing, investors should examine the prospectus to establish what assets the product holds, how they are stored, whether physical redemption is available and what legal claim the securities represent.
Gold-Mining Shares
Mining shares provide exposure to businesses whose earnings depend partly on gold prices, rather than direct ownership of the metal.
Production volumes, extraction costs, capital expenditure and the quality of mineral reserves all influence profitability. Mining companies also face political, environmental and operational risks in the countries where they work.
Higher bullion prices can improve earnings when production costs remain relatively stable, potentially supporting dividends and share valuations. Unexpected expenses or operating problems can, however, reduce profits even when the gold price increases.
Mining shares also move with broader equity markets. During periods of financial stress, investors may sell them alongside other stocks, making their performance substantially different from that of physical bullion.
For portfolio purposes, they are better treated as an equity investment than as a substitute for directly held gold.
Why the Swiss Franc Changes the Return
Gold is quoted internationally in US dollars, but Swiss investors measure their returns in francs. Movements in USD/CHF can therefore add to or offset changes in the bullion price. A 10% increase in the dollar gold price, accompanied by an 8% depreciation of USD against CHF, would leave an investor with a return of approximately 1.2% in francs, before expenses. If gold gained 5% while the dollar depreciated by 10%, the investment would lose approximately 5.5% in CHF terms.
The currency effect also works in the opposite direction. A stronger dollar can improve the return in francs even when the international gold price changes relatively little.
Families already holding large US equities, bonds or private investments should consider how another unhedged dollar-sensitive position would affect their overall exposure. Currency-hedged gold products can reduce some of those movements, but the protection comes with additional expenses and can influence performance over time. The trading currency of a fund is not sufficient evidence of its currency exposure. Investors need to examine the underlying assets and hedging arrangements when comparing gold products.
How Gold Fits Into Family Wealth
Central-bank purchases provide evidence of gold’s continuing role in national reserves, but they offer little guidance on how much a wealthy family should own. Reserve managers and private investors have different investment horizons, cash requirements and responsibilities.
Families with substantial holdings in operating businesses, property and private investments may consider gold as an additional source of diversification. Others already hold considerable defensive assets through cash, government bonds and other liquid investments.
The purpose of the allocation influences the choice of product. Investors prioritising direct ownership and long-term custody may favour bullion, while those who expect to rebalance regularly may find exchange-traded products more convenient.
Gold’s recent price decline also matters when assessing a new investment. Central banks and funds continued buying throughout the correction, yet their demand did not prevent losses. Investors entering the market after a period of heavy buying still face the possibility of further declines.
A family increasing its allocation should establish how much it intends to hold, whether it can tolerate an extended fall in prices and when it would reduce or replenish the position.
The review should include future spending requirements, available cash reserves and the currencies in which the family expects to meet its obligations. Direct bullion ownership involves different practical commitments from holding securities that can be sold through an investment account.
1. How much gold exposure do we already have?
Review physical bullion, gold-backed funds, structured products and mining shares separately. Identify existing positions and any overlapping exposure before purchasing more.
2. What exactly will we own?
Establish whether the investment provides ownership of allocated bullion, units in a fund or a contractual claim against a financial institution. Ask for the custody arrangements, legal documentation and redemption terms.
3. What will it cost to buy, hold and sell?
Compare transaction spreads, management charges, storage fees, insurance and delivery costs. Request an estimate of total expenses over five and ten years.
4. How will currency movements affect our returns?
Ask your wealth manager to calculate potential returns in Swiss francs under different gold-price and USD/CHF scenarios. Compare hedged and unhedged alternatives where available.
5. What role should gold play in the wider portfolio?
Review the proposed holding alongside equities, bonds, property, private investments and cash reserves. Set an allocation and rebalancing policy that reflects the family’s investment horizon and future spending requirements.
