Bullion is trapped between powerful opposing forces. On one side, global central banks continue to add to their reserves at a steady clip, with China extending its buying streak to a 19th consecutive month. On the other, a blockbuster US jobs report has slammed the brakes on rate-cut hopes, sending the dollar surging and gold sliding more than 4% in the past few sessions.
The US economy added 172,000 new positions in May — nearly double the consensus estimate. That recalibration has pushed the implied probability of a Federal Reserve rate hike before year-end above 70%, according to market pricing. Higher interest rates erode the appeal of non-yielding bullion, and the yellow metal has felt the sting: it now changes hands at around $4,355.10 an ounce, a monthly decline of almost 8%. The stronger greenback adds another layer of pain, making dollar-denominated gold more expensive for overseas buyers.
Yet beneath this bearish surface, a very different story is unfolding in the official sector. China’s State Administration of Foreign Exchange reported on June 7 that the People’s Bank of China had expanded its holdings by 320,000 fine ounces in May, or roughly 9.95 tonnes, bringing total reserves to 74.96 million ounces — 2,331.52 tonnes. Notably, the dollar value of those reserves actually fell from $344.2 billion to $340.8 billion, illustrating how lower market prices are weighing on even the most determined accumulator.
That domestic picture is far from uniform. The Shanghai Gold Exchange delivered just 63.5 tonnes of gold in May, the lowest monthly tally since February 2020 and about half the March volume. State-led purchases are running hot while private appetite cools sharply. China is not alone in its official buying: Poland added 14 tonnes in April, bringing its year-to-date haul to 45 tonnes. Across the past 36 months, central banks globally have been net purchasers at an average of 29 tonnes per month. A broader shift is also underway — investment demand for bars and coins is on track to overtake the jewelry market for the first time this year, underpinned by buying from China and India.
Should investors sell immediately? Or is it worth buying Gold?
On the technical front, the precious metal looks bruised. At its current level, gold sits roughly 22% below its 52-week high of $5,626.80. The relative strength index has slid to 35, and the spot price is about 6% beneath its 50-day moving average — textbook signs of weakness. The headwinds are well-rehearsed: rising US Treasury yields, a muscular dollar, and escalating geopolitical tension in the Middle East have created a complex environment. Israeli strikes on Iran and Lebanon pushed oil prices up more than $4 a barrel, stoking inflation fears that are ambiguous for gold — a haven under geopolitical strain, but a victim if rate expectations tighten further.
Longer-term structural trends, however, remain supportive. The European Central Bank noted in its latest report on the international role of the euro that gold accounted for 27% of global official reserves at the end of 2025, outpacing US Treasuries at 22% and the euro at 15%. Meanwhile, China’s foreign-exchange reserves climbed to $3.44 trillion in May, the highest since late 2015, as the country continues to build both its currency and gold buffers.
Market analysts see the current selloff as a correction within a broader uptrend. Metals Focus forecasts an average price of $4,920 for the full year. Ed Yardeni of Yardeni Research is more aggressive, predicting a swift recovery once geopolitical tensions around Iran ease. He targets $5,500 by year-end and $10,000 by the close of the decade. For now, gold remains caught in a tug of war between the gravitational pull of central bank accumulation and the centrifugal force of a hawkish Fed.
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