Gold's Paradox: Historic Chinese Buying Spree Overwhelmed by Fed Rate Hikes and Geopolitical Thaw
23.06.2026 - 22:06:16 | boerse-global.de
China imported a record 692 tonnes of gold in the first five months of this year, a 76% surge versus the same period in 2025. Yet the precious metal is trading at $4,155.40 an ounce, down 1.29% on Tuesday and roughly 26% below its January peak of $5,627. The disconnect between voracious physical demand and a collapsing price has rarely been starker.
The buying binge shows no sign of slowing. May imports hit 163 tonnes, the highest monthly tally since March 2024, according to data cited by the Guangzhou Southern Gold Market Academy. A new licensing regime introduced on June 1 has eased access for selected Chinese banks, helping to stabilise supply. Analysts point to booming demand for physical bars and the success of gold savings plans as key drivers behind the import wave. But none of that has been enough to halt the downdraft.
The main culprit is US monetary policy. Expectations have flipped sharply since the start of the year. Bank of America now forecasts three Federal Reserve rate hikes in 2026, pushing the fed funds rate to as high as 4.50%. The central bank's latest dot plot confirms a rate increase by year-end, with cuts pushed out to at least 2027. The reason: stubborn inflation. The Fed jacked up its PCE inflation forecast to 3.6%. Under new chairman Kevin Warsh, the message is higher for longer. The dollar has responded accordingly, with the euro briefly slipping to $1.1383, its weakest since June 2025 — a punishing headwind for gold priced in US currency.
Should investors sell immediately? Or is it worth buying Gold?
At the same time, gold's geopolitical risk premium is evaporating. Washington granted Iran a 60-day license to sell oil on international markets, reviving hopes of greater global supply. Shipping traffic through the Strait of Hormuz is picking up, and alternative export routes from producers like Kuwait are gaining traction. The Iran conflict that erupted on February 28 had earlier sent gold soaring, but diplomatic progress is now prompting investors to cash out. The combination of a hawkish Fed and a thawing Middle East has dealt the metal a one-two punch.
Investment banks are recalibrating fast. Goldman Sachs slashed its year-end target by $500 to $4,900 an ounce, moving its expected first rate cut to mid-2026. Should the Fed resume tightening next year, Goldman sees gold sliding to $4,400 by December. J.P. Morgan, by contrast, remains far more optimistic, targeting $6,000 in the fourth quarter of 2026. Bank of America holds to its $6,000 target, provided de-dollarisation continues. The divergence reflects a market torn between near-term macro pressure and a long-term structural bid from central banks.
That institutional support is not fading. A World Gold Council survey found that 45% of central banks plan to increase their gold reserves over the next twelve months, and 83% expect to hold a higher share within five years. Those figures provide a floor, but they cannot prevent sharp corrections when the macro winds shift. The technical picture looks frail: the Relative Strength Index has fallen to 35–36, signalling oversold conditions, yet the price remains well below its 50-day moving average of $4,527. No convincing bounce has materialised.
The next major catalyst arrives on June 25, when the US releases its latest PCE inflation report. A hotter-than-expected reading would reinforce rate-hike bets and likely drag gold lower. For now, the market is caught between two forces: a wall of physical buying from Asia and the weight of a dollar-strengthening, rate-hiking Federal Reserve. Which force wins will determine whether gold can reclaim its shine or continues to tarnish.
Ad
Gold Stock: New Analysis - 23 June
Fresh Gold information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
