Gold’s $4,570 Ceiling: Why Chinese Buying Is Masking a Shrinking Futures Market

Gold price stagnates near $4,570 as Chinese central bank and private purchases accelerate, but speculative futures open interest hits 17-year low. Analyst forecasts range from $2,500 to $6,000.

The gold market is caught in a battle of two opposing forces. Physical demand out of China is accelerating, but speculative interest on the futures exchange has collapsed to levels not seen in 17 years. The result: a price that hovers around $4,570, neither breaking higher nor suffering a sharp breakdown.

On Friday, bullion settled at $4,569.90 an ounce, up 1.57% on the day and 1.08% higher for the week. Year-to-date, the precious metal has climbed 5.25%. Yet the relative strength index sits at a neutral 49.8, confirming the lack of conviction in either direction.

China doubles down on physical purchases

The People’s Bank of China extended its gold-buying spree for an 18th consecutive month in April, adding roughly 260,000 ounces — the largest monthly increase since December 2024. That lifted the country’s official reserves to 74.64 million ounces. The strategy is clear: reduce reliance on the US dollar and shift toward tangible assets. Poland and Turkey have also stepped up their purchases recently.

Beyond central bank activity, Chinese private demand is surging. Net gold imports via Hong Kong jumped 81.2% in April to 86.7 tonnes, underscoring that physical appetite remains a concrete driver, not just a chartist talking point.

Speculators flee the futures pit

While central banks and Asian buyers accumulate, the speculative crowd is heading for the exits. Open interest in gold futures slumped to 328,612 contracts at the close of last week — the lowest tally since May 2009. Existing positions are being liquidated rather than new ones built, explaining why the metal has failed to gain upside momentum despite robust physical flows.

The retreat in speculative positioning has kept a lid on prices. Gold remains 16.15% below its annual high, and the 50-day simple moving average at $4,630.20 is acting as a near-term ceiling. A separate calculation puts that average at $4,639.16, reinforcing the resistance zone between $4,587 and $4,643. The 20-day SMA at $4,586.20 adds another hurdle.

Support, meanwhile, sits at $4,436 and $4,341, with the 200-day line at $4,426.50 providing a longer-term floor.

A dizzying range of forecasts

The lack of direction is mirrored in wildly divergent analyst projections. Goldman Sachs sees gold hitting $5,400 an ounce by the end of 2026. JPMorgan’s older call envisions $6,000 to $6,300. At the other extreme, S&P Global forecasts a drop to $2,500 this year and just $2,100 by 2027. UBS recently trimmed its end-2026 target from $5,900 to $5,500.

Such a wide spread explains the market’s nervousness. Some houses treat gold as a hedge against inflation, interest-rate risk, and geopolitical turmoil. Others anticipate a sharp correction if those supports fade.

Macro winds and the next catalyst

Progress in US-Iran nuclear talks pushed oil prices lower last week, dragging down inflation expectations and weakening the dollar — giving gold the breathing room it needed to recover above $4,500. But a sustained rally requires a break above $4,630.20 on a closing basis, which would open the door to the $4,800 area.

This week brings US labor data and eurozone inflation figures, both of which could shift rate expectations at the Fed and the ECB. Since gold pays no yield, its price is directly sensitive to changes in real rates. A stronger-than-expected jobs report would pressure the metal; a soft print could give it the lift needed to challenge resistance.

Monday’s close will be telling. If gold can hold above $4,500 and push toward the $4,587-$4,643 zone, Friday’s advance gains credibility. A swift reversal back below the round number would dismiss the move as a brief reprieve after a volatile week.