This 'gold carry trade' involves higher risks and is very short-sighted. The process of lending gold has advantages and disadvantages. The advantages are the return for the central bank, the reduced economic and environmental costs of gold production, and the opportunity for mining corporations to hedge their costs by 'forward-selling', as described above. The disadvantages are the risk of not getting the gold back, the pressure on the mining industry, and the effects on supply and demand. The last point is of importance.
Any lending leads to a reduction in gold production and growth in gold consumption.
The first 100 t, let's say, that enters the market via central bank lending is additional supply. So the lending process leads to a gap between production and consumption. These 100 tonnes are additionally lent gold, because the gold of the previous year is already in the market. In this case the gap would stay the same, so there would be no additional effect on the price. But now 200 tonnes have been lent.