Central banks’ gold demand fell for a third straight quarter as massive sales by Turkey outshone buying elsewhere.

Net purchases by the institutions declined 64% to 103 tons in the second quarter, according to a report by the World Gold Council. That took demand to the lowest in more than a year.

The main cause was massive sales by the Central Bank of Turkey, which released 132 tons of gold into its local market after imports were constrained. Consumer demand has soared this year because of high inflation and concerns about political instability following the country’s election.

Central bank purchases have been a pillar of support for bullion prices, which have come under pressure from tighter monetary policy. The institutions’ record buying in the second half of 2022 helped soak up selling from big money investors, causing the metal’s price to trade at a persistent premium to most models of its value.

Continuation of that buying is now key to the outlook for gold this year. Apart from Turkey, the second quarter saw large purchases by the People’s Bank of China, the Monetary Authority of Singapore and the National Bank of Poland.

The WGC expects central bank demand this year to be roughly half that of a record 2022. That still would equal more than 500 tons of purchases, according to the report.

“I don’t think we will see a repeat of Turkey’s central bank selling off gold to provide liquidity to commercial banks,” said John Reade, chief market strategist at the WGC. “By implication, we would expect to see a better third quarter number.”

Other highlights from the report include a 31% quarter-on-quarter decline in China’s buying of jewelry, bars and coins. Gold consumption there has slowed as pent-up demand following a year of lockdowns faded.