Gold's Official-Sector Bid Meets a Firmer Dollar as Traders Look Past the Payrolls Surprise

China's central bank added another 830,000 troy ounces of gold to its reserves in October, lifting total holdings to 78.3 million ounces and extending an unbroken buying streak to 24 months. The purchases, reported by Reuters, keep the People's Bank of China in the market as a steady, recurring buyer — a rare constant at a time when other corners of demand are contracting.

That official-sector support now sits alongside a second institutional pillar. Physically backed gold ETFs attracted global net inflows of USD 2.7 billion last month, according to World Gold Council figures published Thursday, pushing their holdings to 4,275 tonnes — a month-end record. Europe led the inflows, with Asia also adding, while North America booked outflows.

A split demand picture beneath the surface

The two engines are pulling in different directions from the rest of the market. Central banks and other official institutions bought more than 321 tonnes in the quarter, the WGC reported Tuesday — 42 percent more than a year earlier — taking year-to-date purchases to 675 tonnes. Yet total worldwide gold demand, including over-the-counter trade, slipped 1 percent year on year. Bar and coin demand dropped 19 percent, and jewellery demand fell 17 percent.

The upshot: institutional buying is offsetting weakness in retail and decorative segments rather than riding a broad-based surge. That narrows the foundation beneath prices.

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Payrolls put the brake on the recovery

The metal's advance stalled yesterday after a surprisingly robust US labour report. Employers added 165,000 non-farm jobs in October, and the unemployment rate stood at 4.1 percent — a reading well ahead of forecasts. The dollar and Treasury yields both climbed in response, according to Reuters, and Bloomberg reported that traders now largely expect the Federal Reserve to raise rates in December.

Spot gold settled at USD 4,063.65 an ounce, down 0.6 percent on the day, as the data renewed pressure on the metal. Positioning data pointed the same way: money managers cut their bullish gold wagers in the week through November 3 to the lowest level since June, Bloomberg reported, suggesting the recent rebound ran into a more cautious stance among that cohort.

One house sees an oversold opportunity

Not everyone reads the pullback as a warning. LS Securities argued today that gold is as undervalued as it has been since 2022, with analyst Hong Seong-gi calling the decline overdone. He frames the current level as an attractive entry point, conditional on US rate hikes coming to an end in the first half of 2027.

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The coming week offers several tests. US consumer price data for October are due Tuesday, with analysts warning that a hot inflation print could make a December rate increase more likely, while a softer reading would give gold room to breathe. Initial jobless claims, existing home sales and US producer prices follow later in the week, along with commentary from central bank officials.

For bullion holders, the calculus is straightforward. Continued Chinese purchases and ETF inflows provide a floor; whether that floor holds depends on how hard the US rate outlook pushes back. If inflation data blunt the case for further tightening, the recovery gains firmer footing. If price pressures run hot again, the official-sector bid will have to carry the market largely on its own.

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