Gold in a Tug-of-War: Central Bank Purchases Support Prices as Fed Bets Waver

The yellow metal has stuck to a narrow trading corridor as two heavyweight forces pull in opposite directions. On one side, sturdier US economic reports erode hopes for quick interest-rate relief and rally the dollar; on the other, massive central-bank purchases lay down a firm underpinning. Gold remains sandwiched between these dominant drivers.

The People’s Bank of China has increased its gold reserves for the 15th consecutive month. The strategic stance is unmistakable: Beijing continues to diversify away from the US dollar and systematically expand its bullion stockpile. The National Bank of Poland has also emerged as a meaningful buyer.

The Facts:
* China has been buying gold continuously for more than a year
* Other central banks are following this trend
* Gold ETFs are seeing strong inflows
* Official demand is providing a lasting support for the market

This persistent official-sector demand creates a solid floor for the gold price. Both central banks and institutional investors remain inclined to use the metal as a hedge.

Should investors sell immediately? Or is it worth buying Gold?

U.S. labor market undermines rate-cut fantasy

The latest U.S. payroll figures have reversed the rate-cut outlook. The robust data signal no hurry for the Federal Reserve to trim rates. Consequently, the dollar strengthened, making gold more expensive for overseas buyers.

Higher rates for an extended period raise the opportunity costs for non-yielding bullion, while fixed-income assets gain appeal. The market has dialed back expectations for imminent rate reductions.

Outlook: Inflation data in focus

Gold continues to be buffeted by opposing forces. Geopolitical risk and ongoing central-bank demand provide support, while a firmer dollar and shifted rate expectations cap upside potential. The forthcoming inflation data could tilt the balance, indicating which side gains the upper hand. Only then will it be clear whether the market breaks higher or retreats from the current sideways drift.