Market analyst Zhang Chining Z0020302 of Guotai Junan Futures recently flagged a development that has renewed attention on gold. Kazakhstan, one of the world's largest gold buyers, has announced it will trim its gold holdings, planning to reduce gold's share of its foreign exchange reserves by about 3 percentage points before the end of this year and tilt its reserves more toward U.S. Treasuries. The logic is straightforward: gold accounts for nearly 78% of the Kazakh central bank's official reserves (the comparable broad measure in China is only about 8%-9%), leaving the reserve structure highly concentrated and insufficiently diversified. At the same time, U.S. Treasury yields have climbed to multi-year highs — an asset that is nearly risk-free yet still pays high interest naturally erodes the appeal of a non-yielding asset like gold.

How big a player is Kazakhstan in the gold-buying camp?

Kazakhstan belongs to the top tier of central bank gold buyers in recent years. According to World Gold Council data, its purchases ranked second globally in 2025 and fourth in the first eight months of 2026. If Kazakhstan cuts gold's share of its FX reserves from 78% to 75%, it would need to sell roughly $1.99 billion — based on a gold price of $4,172 per ounce, that implies a reduction of about 477,000 ounces, or roughly 14.8 tonnes, by year-end. That volume is quite limited relative to global gold market supply and demand, and the chart below helps put it in perspective. Comparison of Kazakhstan's gold reduction with global benchmarks. Data source: World Gold Council. *Chart generated by AI.

The broader central bank buying trend remains intact

WGC data shows central banks worldwide continued to buy gold this year, with Poland, China and Uzbekistan the main buyers. China has steadily increased its purchases, adding 650,000 ounces month-on-month in August and 740,000 ounces in September (source: State Administration of Foreign Exchange). Russia's Finance Ministry has also recently signaled it will significantly step up gold purchases.

A few extended thoughts

Following Kazakhstan's logic, since elevated U.S. Treasury yields have weakened gold's appeal, does that mean gold could regain upward momentum once yields decline? Generally speaking, I see three possible scenarios for falling yields, for reference: First, the supply side. U.S. federal debt keeps snowballing, now around $41 trillion, while fiscal spending chronically exceeds revenue, with the gap mainly financed by issuing Treasuries. The more debt is issued, the more prices are pushed down and the more yields rise. Conversely, if the Treasury issues fewer medium- and long-term bonds, or buys back some existing long bonds, supply pressure eases and bond prices find support, giving the 10-year Treasury yield (often negatively correlated with gold) room to fall. Second, the demand side. Buying is currently weak: inflation remains above 3% and energy prices have pushed higher, so buyers demand higher yields on bonds; meanwhile, the Fed has exited its large-scale bond purchases, removing a price-insensitive major buyer and weakening absorption capacity. What to watch going forward is whether any new motivation revives this buying — if buyers return, prices find support and the 10-year Treasury yield has room to fall. Finally, the fiscal balance itself. Markets worry about the U.S. government's chronic deficits and mounting debt, and concerns about long-term U.S. credit risk are gradually building. So if U.S. fiscal policy adjusts — for example, by cutting spending or raising taxes, so more comes in and less goes out — making the fiscal position look "richer," worries about debt repayment and excessive debt-service pressure would cool, and the 10-year Treasury yield could drift lower as a result. In summary, gold is currently in a stage of range-bound contention. There is no need to be overly bearish — just stay patient and wait for the turning point to materialize. Deadline: October 13, 2026, 10:57 a.m. Disclaimer: Investors must be aware of market risks. Nothing in this commentary constitutes investment advice to anyone under any circumstances; it is for discussion and learning only, and investors bear full responsibility for any consequences of decisions made based on it. Under no circumstances does Guotai Junan Futures Co., Ltd. (the "Company"), its employees or affiliates promise investors certain profits, nor do they accept any liability for losses incurred by anyone from using any content herein. This commentary draws on publicly available information, but the Company makes no guarantee as to its accuracy, completeness or reliability. Specific trading rules mentioned are subject to exchange announcements; investors should closely monitor exchange adjustments to trading rules, and the Company assumes no responsibility for this. Copyright of this commentary belongs solely to the Company, and no institution or individual may reproduce, copy, publish or quote it in any form without prior written permission.