Gold Steadies as Stocks Rally from Iran War Chaos, But Central-Bank Buying Sinks

GOLD and SILVER PRICES steadied with Western stock markets on Wednesday as the Middle East war spread further but oil and gas prices paused this week's spikes, while new data showed central bank gold demand falling dramatically in 2026 so far.

"Geopolitical uncertainty remains a persistent backdrop to central bank demand," says the mining industry's World Gold Council, compiling official-sector gold buying data published by the International Monetary Fund for the start of 2026.

"[But] January's high volatility [in prices made] a notable exception," the WGC says, with net purchases by the official sector plunging to just 5 tonnes as gold spiked close to $5600.

That was the weakest reported net central-bank gold buying since December 2024, down nearly 4/5ths from last year's monthly average of 27 tonnes on the IMF figures. Gold's price volatility then leapt further in February as prices sank from the New Year highs.

But separate estimates from the WGC say that central-bank demand may, in fact, have been almost twice the IMF figure over the past 10 years, hitting post-WW2 central bank gold-buying records and equal to nearly 1/5th of new mining output since 2016 as sovereign states made heavy unreported purchases in a bid to reduce their dependence on US Dollar reserve assets.

"From Venezuela to Iran, the world has come to a sobering realization," says China's government news agency Xinhua today.

"What Washington calls a 'rules-based international order' is, in practice, a 'law of the jungle' driven by self-interest...[Attacking Iran marks] a blatant violation of international law and the fundamental principles of international relations."

"The unprovoked attacks by Israel and the USA [against Iran] trample on international humanitarian law and drag the region into chaos," agrees Kremlin spokeswoman Maria Zakharova, also calling France's new plan boost its nuclear arsenal "hostile specifically toward Russia" and warning that UK medical staff reportedly working to treat Ukraine's military casualties are "legitimate targets" for Russian forces.

London gold bullion today touched $5205 per Troy ounce − rallying by 4.1% from Tuesday's 4-week gold price low − before giving back $40 mid-afternoon.

Silver also halved the prior 2 days' plunge this morning, peak around $86.80 per Troy ounce at Wednesday's 12 noon London bullion auction, before falling $3.

Crude oil meantime edged back from this week's 15.8% surge, losing $2 per barrel of benchmark Brent at $82.30, while Dutch TTF gas futures cut 1/10th off this week's near-70% surge.

The USA today said one of its submarines has sunk an Iranian navy ship in the India Ocean, while air defences under the umbrella of the NATO military alliance shot down a missile aimed at Iran's former regional ally Turkey.

But key US allies the UK and France continued to question the legality of the White House's war on Iran, while Spain repeated its refusal to let US forces launch attacks from Spanish military bases despite President Trump vowing to shut all trade with the Nato member in retaliation.

"We are certainly not going to be anybody's vassals, we won't tolerate any threats, and we'll defend our values," said Finance Minister María Jesús Montero, claiming support from the European Commission and other European Union member states.

"We're not going to be complicit in ‌something that's bad for the world nor contrary to our values."

With longer-term interest rates in the bond market also pausing this week's war-driven spike in borrowing costs, the US Dollar edged back as well after leaping 2.0% against the rich world's other major currencies and reversing all of last week's drop to 22-month lows versus the Chinese Yuan.

The Dollar's drop today helped put gold in Shanghai − entry-point for bullion into the world's No.1 precious metals consumer market − at a $30 per ounce premium over London quotes, extending the strongest incentives for new gold imports into China since late-January's spike to all-time record high gold prices worldwide.