Turkey Dumped 58 Tons Of Gold After Iran War Started, Slamming Price

Turkey Dumped 58 Tons Of Gold After Iran War Started, Slamming Price

There has been much speculation about the mystery seller(s) that sent gold sliding into a bear market from its January high: was it a sovereign seeking to plug holes in their budget from the recent surge in oil, a "market maker" trying to spark stop loss liquidations, or just retail investors taking profit after one of the best years in history for the precious metal?

Today we learned the identity of at least one of the sellers: Turkey’s central bank sold and swapped about 60 tons of gold, worth more than $8 billion, or more than 10% of the country's total holdings, in two weeks after the start of the war in Iran, adding to the sharp downward pressure on bullion prices.

Turkish gold reserves showed a decline of 6 tons in the week of March 13 and another 52.4 tons in the week of March 20, marking a sharp drawdown in reserves, according to the latest data published by the central bank. While the composition of the sales is unclear, some of that was sold outright, while the majority was used to secure foreign exchange or liras via swap agreements, according to Bloomberg. It’s not uncommon for central banks to sell spot gold and simultaneously agree to buy it back in the future via swap agreements, effectively a gold-collateralized USD loan, which grants the country cheap dollar funding using the precious metal as collateral.

The move comes amid strains on Turkey’s disinflation strategy - meaning the currency isn’t allowed to depreciate at a rate faster than monthly inflation - which relies heavily on maintaining a stable or steadily depreciating lira, including with hard-currency interventions, usually via state-run banks. Rising energy import costs and increased dollar demand since the conflict began have made that approach more challenging to maintain, and forced Turkey to resort to its hard currency reserves. 

Turkey officials turned to gold sales and gold swap arrangements from the central bank’s $135 billion stockpile to meet liquidity needs and stabilize domestic demand, according to Iris Cibre, the founder of Phoenix Consultancy in Istanbul. She estimated total sales at 58.4 tons, with more than half of that conducted via gold-for-foreign-exchange swaps abroad.

That amount exceeds total outflows from gold-backed exchange-traded funds tracked by Bloomberg, which were about 43 tons over the same two-week period. ETFs are one of the most popular ways for institutional and retail investors to get exposure to gold.

Turkey is especially vulnerable to inflation shocks and balance-of-payment concerns should the war in Iran prolong because it needs to import almost all of its oil and gas. Officials are already struggling to rein in an inflation rate that last registered at 31.5% in February, one of the highest in the world. 

Turkish policymakers have so far responded to the crisis in the Middle East - which has sent oil prices soaring to above $100 a barrel from around $70 - by tightening liquidity, making lira funding costlier, and having state-run lenders intervene in the currency market. 

The sales mark a reversal for Turkey, which has been one of the world’s most aggressive gold buyers over the past decade as it sought to reduce exposure to US dollar-denominated assets. Gold prices have fallen by about 15% this month, with investors taking profits following a strong rally since last year. They extended their drop to more than 3% on Thursday, pushing the price of gold below $4400.

According to Daniel Ghali, a commodity strategist at TD Securities, the economic shock from the war in Iran will likely dent demand for bullion from some central banks while forcing others to sell from gold reserves to meet dollar-denominated obligations.

“Outright sales are not out of the question, although we expect the broader trend to be a step-change lower in the pace of central bank accumulation for the time being,” he said.

Turkey's sales are likely to persist: Bloomberg reported on Tuesday that Turkey’s central bank had been discussing tapping its gold reserves via gold-for-foreign currency swap transactions in the London market, as it seeks to shield the lira from steeper war-related losses. 

Turkey is estimated to hold about $30 billion of those reserves at the Bank of England, which Turkey’s central bank “may decide to use for FX intervention purposes without logistical constraints,” according to a report by JPMorgan Chase & Co. economist Fatih Akcelik on Tuesday.

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Tyler Durden
Thu, 03/26/2026 - 13:35