Gold Rebounds From Seven-Week Low as China's Buying Spree Offers a Cushion

Gold rises 0.7% to USD 4,150.23 after a seven-week low, but 10-year Treasury yields above 5.2% keep the metal 26% below its January peak.

Gold staged a modest recovery on Tuesday, with the metal trading at USD 4,150.23 per troy ounce for a gain of 0.7%, offering the market a breather after the previous session's slide to a seven-week trough.

The bounce follows a bruising stretch in which the spot price fell 3.9% to USD 4,120.49. Bullion now sits 26% below its 52-week peak of USD 5,598.58, a level struck on January 29, 2026 — a decline that has put the psychologically important USD 4,000 threshold back on traders' radar screens.

Yields, Not Geopolitics, Set the Tone

Ordinarily, a turbulent geopolitical backdrop would send investors flocking to gold as a hedge. Not this time. President Donald Trump's rejection of an Iranian proposal and the stalemate in talks over the Strait of Hormuz have instead played out differently in the market. Analysts at DekaBank attribute the escalation in the Middle East to rising energy prices, which in turn have stoked fresh inflation concerns.

The knock-on effect has been a sharp climb in US Treasury yields. Reuters reported that the yield on the ten-year note reached its highest level since June 2007, with the benchmark pushing past the 5.2% mark — a threshold that evokes memories of 2007. Because higher rates raise the opportunity cost of holding a non-yielding asset, this dynamic has overshadowed gold's traditional safe-haven appeal across commodity markets. Hawkish signals from the Federal Reserve had already been weighing on the metal for more than a week.

Forecasters Trim Near-Term Targets, Lift Long-Term Views

Against that backdrop, BMO Capital Markets has recalibrated its expectations. The bank cut its average gold price forecast for the fourth quarter of 2026 by 2%, to USD 4,650 per ounce from USD 4,750. Its analysts now see the USD 5,000 mark being reached only in the second quarter of 2027. At the same time, however, BMO raised its long-term price assumption by a hefty 29%, to an average of USD 4,000.

State Street Investment Management strikes a similarly cautious near-term note. Aakash Doshi, the firm's gold strategist, sees a possible dip toward USD 4,000 as rising yields and a firm US dollar take their toll — yet he too sticks with a call for USD 5,000 per ounce by the second quarter of 2027. Doshi points to sustained institutional interest as a fundamental pillar: global gold-backed index funds drew substantial inflows in August, with US-listed products alone attracting USD 7.9 billion, the strongest increase since September 2025.

Asian Demand Provides a Floor

Fundamental support is also arriving from Asia. According to Bloomberg, Chinese gold imports based on the latest customs data surpassed 1,000 tonnes between January and August — meaning the first eight months of the year already exceeded the total volume recorded for all of 2025. The figures echo State Street's observation that China's non-monetary imports hit a record 1,000 tonnes in the first seven months of the current year.

Attention now turns to Friday, when the US Bureau of Labor Statistics publishes its September employment report. Market participants will scrutinize the data for clues about how much room the Fed has for its next moves. Meanwhile, many players are watching the round USD 4,000 level, where central banks and long-term investors are expected to show increased willingness to buy. So long as prices hold above that line, the broader uptrend remains intact; a sustained break below it would darken the technical picture and open the door to further downside risks.