Gold’s appeal as a safe haven asset is being reinforced by an unlikely force — central banks.
After slowing sharply in Q1, official sector gold buying surged in Q2, with central banks adding a record 289 tonnes. This represents more than five times the previous quarter’s demand, as reported by the World Gold Council.
The renewed appetite for gold points to a broader shift in how counties are managing their reserves. Gold is now viewed as a liquid store of value that carries no exposure to another country’s credit risk, according to investment manager Ninety One.
China and Poland were among the largest buyers, accounting for 33 tonnes and 51 tonnes, respectively. Meanwhile, gold shares in central bank reserves have climbed in recent years.
Ninety One Natural Resources Portfolio Manager George Cheveley says the significance of the central bank is not simply that they are buying gold again, but about the level at which they are prepared to buy.
“Central banks remain committed to accumulating gold, but they are price sensitive,” Cheveley says.
“If that demand is putting a floor under gold around these levels, the implications for gold miners could be significant — particularly when consensus expects the gold price to move considerably lower.”
Ninety One reports that China remains particularly important to the outlook, accounting for one-third of annual gold demand. While the country’s monthly additions are modest compared with its history of accumulation, continued buying points to the strategic role gold plays in its reserves.
BMO analysis also suggests that China’s central bank gold holdings could already exceed 5,200 tonnes — more than double the official figure.
But the trend is not confined to China. Since Western governments froze Russian US dollar assets following the Ukraine war, reserve diversification has become an important consideration for central banks.
Gold’s average share of central bank reserves has risen from 14% to 25% in two years, as reported by Ninety One.
That shift has important implications beyond the bullion market.
From prices to the pipeline
For the mining sector, sustained central bank demand could provide a stronger foundation for gold prices. Implications could stretch from established producers to the explorers and developers seeking to supply the next generation of production.
If sustained central bank demand helps keep gold prices around current levels, producers could continue to benefit from elevated margins and stronger cash flows. Concurrently, a prolonged higher price environment could improve the economics of projects that have yet to reach development.
Ninety One reports that many gold miners are already enjoying margins above 100%. However, valuations have not returned to the levels seen historically when gold equities traded at a premium to the wider equity market.
That disconnect is particularly notable, given the changes that have taken place across the sector over the past decade.
Cheveley says capital discipline is stronger, balance sheets are healthier, and management teams are more focused on cash returns to shareholders.
“If gold can remain in a US$4,000–5,000 [$5,700–7,100] an ounce range, the earnings and cashflow potential for the sector is substantial,” he says.
“Yet gold equities are still not trading at the valuation multiples they commanded historically. That creates the potential not only for higher earnings, but for a re-rating.”
For gold explorers and developers, the implications could be equally significant. Higher long-term gold price assumptions can improve project economics and strengthen the case for further exploration and development expenditure.
Higher prices can also potentially increase the value of discoveries to producers looking to replenish their reserves.
As established miners benefit from stronger cash generation, the need to replace depleting resources does not disappear. Instead, it could place greater focus on the companies at the front end of the mining pipeline — those drilling for new discoveries and advancing undeveloped deposits.
The result is a potential ripple effect across the sector. Central bank demand supports gold, higher prices strengthen producer margins, stronger economics improve the development case for projects, and the need for future supply increases the importance of exploration.
Drilling into a stronger gold market
While established producers benefit from the current gold price environment, the longer-term strength of the sector ultimately depends on what lies underground.
For explorers, a sustained higher gold price can provide greater incentive to invest in drilling and resource growth. Meanwhile making discoveries potentially attracts larger producers seeking future sources of supply.
One company reflecting this renewed interest is Golden Horse Minerals (ASX:GHM). Golden Horse’s share price has increased over 45% in the past month, from $0.41 to $0.60.
The gold explorer holds about 1,900km2 of granted tenure across Western Australia’s Southern Cross Greenstone Belt, where it is progressing drilling and resource definition programs.
In mid-August 2026, Golden Horse reported intersections from an ongoing drill program at the Hopes Hill deposit, returning 16.6m @ 3.4 grams per tonne gold (Au) from 392.4m, including 5m @ 9.9g/t Au from 399m.
Managing Director Nicholas Anderson says the hole confirms the company’s view that it is beginning to delineate “an emerging zone with high metal content, proving an attractive drill target for further exploration”.
Two diamond rigs and one reverse circulation rig are currently operating at Hopes Hill. Drilling is being conducted ahead of an aircore program set to take place across multiple prospects along more than 130km of strike extent. A maiden resource estimate will follow thereafter.
Hopes Hill is a historical mill site and near-term gold producer, having historically produced 2.9 million tonnes @ 2.25g/t Au for 216,000 ounces mined in the early 1990s.
Capital follows the opportunity
The increased focus on exploration is also reflected in the capital markets, with gold-focused companies raising funds to accelerate drilling and advance discoveries.
Green & Gold Minerals (ASX:GG1) recently launched a one-for-two renounceable rights issue to raise $3.2 million. Funds will support exploration and development across its portfolio, as previously reported.
Chairman Tony Bellas says the funds will be used for continued exploration on targets at the Herberton Conductor Metals Project, aimed to make a new resource discovery, as well as development drilling and test work at the Mt Wandoo Project.
Mt Wandoo sits within the Chillagoe Project, where drilling being currently carried out aims to maximise the ounces recoverable by open-pit mining. Previously conducted ore sorting testwork achieved up to eight times grade increase at 91% gold recovery using XRT ore sorter.
Green & Gold Minerals is advancing rapidly towards mine development at Mt Wandoo, which has an inferred resource of 32,000 ounces of gold and 387,000 ounces of silver.
For explorers, access to capital is critical, as strong gold markets can provide the funding needed to turn geological targets into defined resources. Meanwhile, exploration can, in turn, create opportunities for further investment, partnership, or eventual acquisition.
From targets to discoveries
That exploration pipeline is also expanded through the identification of new mineralised zones.
Evergold Minerals (ASX:EG1) recently identified a new zone — Vanguard — of shallow gold mineralisation within the Mt Monger Gold Project in Western Australia.
The company described Vanguard as an “important addition” to the Duchess of York prospect’s story. Director Glenn Grayson pointed to stockworks quartz veining, visible sulphides, and the porphyry-sediment contact as geological features supporting the interpretation that the zone could represent an extension of the existing system.
Evergold has also expanded its Katalina target and defined two new priority gold targets within the Leonora Goldfields Project in Western Australia.
Grayson says this work has moved Leonora from ‘broad’ regional prospectivity to “a much clearer set of drill-ready targets”.
“We can now see where the key structures intersect the strongest gold anomalism, giving us a far more focused basis for drilling,” Grayson says.
Leonora hosts a JORC inferred mineral resource of 63,000 ounces of gold @ 1.41g/t, including 48,600 ounces at 1.38g/t at Craig’s Rest. The three new targets lie within the same tenement package as Craig’s Rest.
Together, these examples highlight the role explorers can play in a strengthening gold market. Identifying new mineralisation, expanding existing resources, and building the pipeline of deposits that could feed future production.
Turning discoveries into production
For gold developers, the opportunity sits further down the pipeline — converting mineral discoveries into economically viable mines.
Higher and more resilient gold prices can materially change the equation for projects progressing through feasibility, permitting, financing, and construction.
Higher and more resilient gold prices can materially change the equation for projects still progressing through feasibility, permitting, financing, and development.
Projects that may have faced tighter margins under lower price assumptions can become more attractive as revenue potential rises — potentially strengthening the case for further investment and development.
That is being reflected in the financing and development activity surrounding projects across the sector.
Toubani Resources (ASX:TRE) owns the Kobada Gold Project in Mali, which has an average gold production of 162,000 ounces per year. The project also has a development capital expenditure of US$216 million ($308 million) and low all-in sustaining cost of US$1,175 per ounce.
In late August 2026, Toubani received US$25 million in first drawdown proceeds under a previously reported gold stream funding package with Fortuna Holdings (previously named Eagle Eye Asset Management).
Managing Director Phil Russo says the completion of the first drawdown under the gold stream is a key milestone as the company continues to “advance construction activities at the Kobada Gold Mine”.
More than a strong commodity price
Meanwhile in Australia, developer Antipa Minerals (ASX:AZY) is focused on the Minyari Dome Gold-Copper Project in Western Australia, which contains a 3.6-million-ounce gold equivalent resource.
The company is currently preparing to release a Prefeasibility Study for Minyari Dome, following completion of detailed option studies.
As previously reported, the preferred pathway comprises carbon-in-lead (CIL) gold doré production, followed by flotation of CIL residue to produce a separate copper concentrate.
For developers, the current gold environment, therefore, provides more than a stronger commodity price. It can influence project economics, financing capacity, and the ability to attract the capital required to move resources towards production.
From central banks accumulating gold to explorers drilling for new discoveries and developers moving projects towards production, the strength of the gold market is creating effects across the mining pipeline.
Whether that translates into a broader re-rating of gold equities will depend on how long elevated prices can be sustained.
Write to Aaliyah Rogan at Mining.com.au
Main image: Deutsche Bank
