Gold’s Disconnect: Chinese Buying Spree Fails to Stem Sell-Off as Yields and a New Fed Chair Bite
Published on 05/17/2026 at 14:43 | Redaktion boerse-global.de
A record-breaking run by China’s central bank has done little to shield gold from the storm brewing in bond markets and Washington. The People’s Bank of China added another 8 tonnes to its reserves in April, stretching its buying streak to 18 straight months and lifting official holdings to 2,322 tonnes. Yet bullion slumped nearly 4% on the week, closing Friday at $4,543.60 an ounce.
The divergence between physical appetite and financial-market reality is stark. China’s net gold imports hit 316 tonnes in the first quarter alone, a huge year-on-year jump, while global demand for the metal set a fresh record in the opening three months of the year. On paper, that should provide a sturdy floor. In practice, it has been overwhelmed by forces from the US economy.
Strong labour-market data and a 0.5% rise in retail sales have torpedoed hopes of an early rate cut. Ten-year Treasury yields shot up to a range of 4.54%–4.60%, and with gold offering no income, the appeal of yielding assets has sucked capital away from the precious metal. The dollar rallied in sympathy, the dollar index hitting its highest level since early April.
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An oil-price shock added another layer of pressure. Reports of a blockade in the Strait of Hormuz pushed crude up by around 4%, and the International Energy Agency warned of shrinking global inventories. Higher energy costs feed directly into inflation — the US consumer price index climbed to 3.8% year-on-year in April. But instead of burnishing gold’s inflation-hedge credentials, the spike only strengthens the case for the Federal Reserve to keep rates elevated.
The Fed’s leadership changed hands on Thursday, with Kevin Warsh taking over as chair and replacing Jerome Powell. Powell had recently cautioned that a December rate cut was far from certain, and markets have taken the hint. According to the CME Group, more than 97% of traders expect rates to remain unchanged in June. For gold, which thrives in a low-rate environment, the outlook is unmistakably hostile.
Technically, the picture has soured. Gold now trades roughly 3.65% below its 50-day moving average of $4,728, with the 52-week high of $5,450 — set in late January — more than 16% away. The relative strength index hovers near 50, offering no clear oversold signal. A recent survey of experts found that 77% anticipate further near-term losses. The uptrend that carried gold through the first four months of the year has been broken.
All eyes are on the coming days for fresh catalysts. The Fed releases its meeting minutes on 20 May, followed two days later by the University of Michigan’s inflation expectations data. Whether yields can remain sustainably above the 4.5% threshold and whether oil prices hold their elevated level will determine if gold can find its footing — or if the selling has further to run.
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