Gold Buckles Under Yield Surge as China’s Eight-Ton Purchase Fails to Halt Slide

Gold’s traditional safe-haven bid failed to materialise last week as a potent mix of soaring US bond yields, a firmer dollar, and hotter-than-expected inflation overwhelmed both geopolitical tensions and sustained central bank buying. The LBMA fix closed Friday at $4,535.37 per ounce, a 2.5% single-day decline that left the metal down roughly 4% for the week and nursing a technical breakdown below the psychologically important $4,600 threshold.

The trigger came from the interest-rate side of the ledger. April’s US consumer price index printed at 3.8% year-on-year, exceeding expectations and pushing the 10-year Treasury yield to 4.59% while the 30-year bond climbed above 5.1%. For gold, which offers no running yield, the opportunity cost of holding the metal rose sharply. A stronger dollar compounded the pain—the dollar index hovered near 99—making bullion more expensive for buyers outside the currency bloc.

Geopolitical stress, normally a tailwind for gold, backfired this time. A meeting between US President Donald Trump and China’s Xi Jinping in Beijing failed to produce a breakthrough on the Iran standoff, and the market priced in a prolonged blockade of the Strait of Hormuz. Brent crude surged past $107 a barrel, stoking inflation expectations. Rather than driving haven flows into gold, however, the oil spike merely reinforced the view that central banks—especially the Federal Reserve—will need to keep rates higher for longer.

Should investors sell immediately? Or is it worth buying Goldpreis LBMA?

The sell-off gained momentum once gold breached $4,600 around 4 p.m. CET, triggering a cascade of technical selling orders. The session low hit $4,507.41. Broader market statistics underscore the severity: the associated gold index closed at 361.89, down 7% on the day and 9.52% on the month, while the relative strength index at 58.1 remains short of oversold territory. The metal now trades well below its 50-day moving average near $4,842, with resistance forming at $4,660. On the downside, the $4,500 zone stands as the next visible support; a clean break below that opens the door toward a deeper technical floor around $4,367.

Yet not all demand is absent. China’s central bank added eight tonnes to its reserves in April, the largest monthly purchase since late 2024 and the 18th consecutive increase. Official gold holdings now stand at 2,322 tonnes, representing 9% of total foreign reserves. Net imports in March reached 143 tonnes, up sharply from the prior month. This buying reflects a strategic long-term shift away from dollar dependence, but it has not been enough to insulate the spot price from the macro headwinds of rising US real yields.

The week ahead offers several potential catalysts. China’s industrial production and retail sales data land on Monday, providing clues on physical demand from the world’s top consumer. The FOMC minutes on Wednesday will be scrutinised for any shift in the rate outlook, while Thursday’s US jobless claims and May purchasing managers’ indices—for the US, eurozone and Germany—could reinforce or ease the rate-hawkish narrative. Friday brings the University of Michigan inflation expectations survey.

The immediate test comes at Monday’s open: if gold can hold the $4,500 area, a technical bounce is possible. Should it give way, the combination of elevated yields and a firm dollar is likely to extend the sell-off, leaving even the most voracious central-bank buying as little more than a floor beneath a falling market.

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