China’s 18-Month Buying Streak Offers Gold a Floor as Fed Headwinds Intensify

Gold ends at $4,521, down 0.76%, 17% below peak. China’s central bank adds 8 tonnes in 18th straight month. Macro headwinds persist; focus on GDP and PCE data.

Gold ended the week at $4,521 an ounce, nursing a 0.76% decline that leaves the yellow metal roughly 17% below its January peak of $5,450. Yet for all the macro pressure pushing prices lower, a powerful counterforce is quietly building a floor under the market: central bank demand, led by China’s relentless accumulation.

The People’s Bank of China added another 260,000 ounces – roughly eight tonnes – to its reserves in April, marking the 18th consecutive monthly increase. That brings the country’s total gold holdings to 2,322 tonnes. Chinese gold exchange-traded funds have also been drawing steady inflows as Beijing steps up its long-term strategy of reducing dollar exposure amid trade tensions, currency volatility and persistent inflation risks.

Macro headwinds refuse to ease

That structural buying is being tested by an unforgiving macroeconomic backdrop. The University of Michigan’s one-year inflation expectations rose to 4.5%, while Brent crude held above $100 a barrel. Together, they reinforce the view that the Federal Reserve will keep rates high for longer. Some 40% of market participants now price in another rate hike by December. For a non-yielding asset like gold, rising real rates directly undermine its appeal.

The dollar’s strength adds another layer of headwinds. A robust greenback raises the opportunity cost of holding bullion and has kept the metal pinned below its 50-day moving average by roughly 3%.

Geopolitics: a mixed bag

Geopolitical risk remains a double-edged sword. Tensions in the Middle East, particularly around the Strait of Hormuz, continue to support safe-haven bids. But reports of détente between the US and Iran have dialled back some of the urgency. Meanwhile, the scheduled meeting between Donald Trump and Xi Jinping in Beijing in mid-May hangs over the market. A genuine breakthrough would reduce the risk premium embedded in gold prices; a failure to reach common ground could drive fresh demand for havens.

Chart levels and the week ahead

From a technical perspective, gold is caught in a narrow and critical band. The support zone between $4,480 and $4,500 is the key line in the sand. A sustained daily close below that area would open the door to $4,360 and potentially $4,300, according to one analysis. The secondary article flags a slightly different floor at $4,493 to $4,533, with a break threatening a slide toward $4,381.

On the upside, resistance stands at $4,516 and $4,564, with a more significant reversal level at $4,535 and a full correction target at $4,602. The relative strength index sits near 50, offering no directional clue. The broader uptrend remains intact as long as gold holds above its 200-day moving average, but the near-term picture is fragile.

Two major data releases this week will determine whether the bulls or bears seize control. The second reading of first-quarter GDP and the April core PCE inflation figure could recalibrate expectations for Fed policy. If inflation proves stickier than anticipated, gold’s 4% year-to-date gain could come under renewed threat. If the numbers soften, the central bank buying story may finally get the oxygen it needs to push prices higher.