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Gold Holds $4,700 Despite Turkey’s Relentless Selling
Turkey’s central bank has become the most aggressive sovereign seller of gold in years, yet the metal’s resilience near $4,700 suggests deeper structural demand is absorbing the supply.
What to know
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Gold is trading at $4,702.70/oz, up 3.9% on the week but down 8.15% over the past month from highs above $5,200.
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Turkey’s central bank has been a persistent net seller of gold reserves, bucking the broader central bank accumulation trend.
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The gold-silver ratio has compressed to 64.3, signalling broad precious metals strength even as gold faces sovereign supply headwinds.
What happened
Gold is sitting at $4,702.70 per ounce after a volatile month that saw prices swing between $4,100.80 and $5,229.70 - a range of over $1,100. The metal has clawed back nearly 4% this week, but the monthly picture remains firmly negative at minus 8.15%. Within that broader correction, one persistent supply-side pressure stands out: the Central Bank of the Republic of Turkey (CBRT) has been offloading gold reserves at a pace not seen from a major sovereign buyer in recent memory.
Turkey’s selling is notable because the CBRT was, until recently, one of the most aggressive gold accumulators globally. World Gold Council figures show Turkey was among the top five central bank buyers in multiple quarters over the past three years. The reversal is stark. The CBRT has been liquidating reserves to defend the lira and manage domestic inflation that remains stubbornly elevated, effectively converting gold into foreign currency liquidity.
Who’s involved
The CBRT is the primary actor here, but it is not operating in isolation. Turkey’s domestic gold market has its own dynamics - retail demand remains robust, and the central bank’s sales into the local market have partially served to reduce gold import pressure on the current account. This is a deliberate policy tool, not a panic liquidation.
On the other side of the trade, central banks across Asia and the Middle East continue to accumulate. China, India, and Poland have all added to reserves in recent quarters. The net effect globally is that central bank demand remains positive, but Turkey’s selling is large enough to register as a meaningful drag on the headline figures.
Speculative positioning also matters. After gold’s price touched $5,229.70 earlier this month, leveraged longs were caught in a sharp unwind. The correction to $4,100.80 flushed out weak hands, and the recovery to $4,700 has been driven more by physical and institutional buying than by fresh speculative enthusiasm.
Why it matters
Gold is holding above $4,700 despite a major central bank actively selling. That tells us something about the depth of current demand. In previous cycles - 2013 being the most relevant comparison - coordinated or large-scale central bank selling contributed to multi-year bear markets. The difference now is that the buyer base is far more diversified.
Turkey’s selling also exposes a tension within emerging market central banking. Gold reserves are meant to be a strategic buffer, but when currencies come under severe pressure, that buffer gets spent. If Turkish inflation remains elevated and the lira continues to weaken, the CBRT may have less gold left to sell - which would, paradoxically, remove a bearish overhang from the market.
Silver’s parallel move is worth noting. At $73.17 per ounce, silver is up 4.05% on the week, and the gold-silver ratio at 64.3 is well below its five-year average. This compression typically signals broad confidence in precious metals rather than a flight-to-safety gold-only bid.
What to watch
The CBRT’s monthly reserve disclosures will show whether the selling pace continues or begins to fade. The $4,500 level on gold acted as support during the recent correction and would need to hold on any renewed selling pressure. The World Gold Council’s next quarterly Gold Demand Trends report will clarify whether Turkey is an outlier or the start of a wider shift among emerging market holders. The monthly range of over $1,100 suggests volatility is not finished.
This article is for informational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.
