Gold powers to £3,233 with 10% August rally as central banks buy record amounts

Gold reached £3,233.40 per ounce today, consolidating August's strongest performance in months. The yellow metal has gained 10 per cent so far this month, its best monthly return since January, as a cascade of soft economic data from the United States has reshaped expectations for interest rate policy across central banks.

Three key economic disappointments arrived within one week: nonfarm payrolls, the Consumer Price Index, and the Producer Price Index all fell short of forecast. Markets repriced Federal Reserve rate-hike odds from 50 per cent to 31 per cent, whilst the Bank of England is widely expected to cut rates by September. When central banks cut rates, real yields on cash decline, making non-yielding assets like gold more attractive. Lower bond yields and a softer US dollar alongside these developments have directly lifted sterling prices.

Institutional demand remains robust. Central banks bought a quarterly record 288.9 tonnes of gold in the second quarter of 2026, even as prices had fallen at that time. This is the traditional behaviour of central bank reserves policy: buying during dips. The persistence of this buying suggests continued confidence in gold's role in reserve diversification, particularly as geopolitical tensions underscore the appeal of non-correlated assets.

For UK investors, spot price at £3,233.40 is the starting point. Factor in dealer premium, 20 per cent VAT on bullion, and delivery costs for the true all-in purchase price. This is not financial advice.