Gold's Supply-and-Demand Split: Record Chinese Buying Overwhelmed by Sticky Prices and a New Fed Chief
Published on 05/17/2026 at 10:12 | Redaktion boerse-global.de
Gold markets currently present a stark contradiction. Physical demand has rarely been stronger — yet the price keeps sliding. The People's Bank of China snapped up another eight tonnes in April, extending its buying streak to an unprecedented 18 consecutive months and lifting official reserves to 2,322 tonnes. China’s net imports of 316 tonnes in the first quarter marked a hefty year-on-year jump, and global gold demand hit a fresh record in Q1. On the ground, the bullion market is booming.
On paper, that story is not being told. Gold closed the week at $4,555.80 an ounce, down 2.61% on the day and 3.49% over the past seven days. The retreat has been accelerating: the precious metal has shed 5.36% in the last 30 days, though it still holds a 4.93% gain since the start of the year.
The culprit is a familiar one — sticky US inflation that is rewriting the rate outlook. April’s consumer price index rose 0.6% month-on-month, pushing the annual rate to 3.8%, while producer prices climbed 1.4% year-over-year. Those numbers have all but extinguished hopes of a near-term Federal Reserve pivot. The CME Group's FedWatch tool shows over 97% of traders betting on no rate change in June.
A stronger dollar has compounded the pain. The US Dollar Index touched its highest level since early April, making dollar-denominated gold more expensive for overseas buyers. And the yield on US Treasuries has moved higher, offering income that gold — with no coupon or dividend — simply cannot match.
Should investors sell immediately? Or is it worth buying Gold?
The negative narrative intensified midweek with a change at the top of the Fed. Kevin Warsh officially took the helm on Thursday, replacing Jerome Powell. Markets have interpreted the handover as a signal that the central bank will maintain its hawkish stance for longer. The new chairman inherits an economy where price pressures have proved stubbornly resilient, and the bond market is already pricing in a higher-for-longer rate environment.
Geopolitical jitters, usually a tailwind for gold, have backfired this time. US President Donald Trump rejected an Iranian peace proposal and threatened tougher military action, sending crude oil briefly above $109 a barrel. The fear of disruptions in the Strait of Hormuz, through which a fifth of the world’s oil passes, has become a direct risk. For gold, that is a double-edged sword: higher energy costs feed inflation expectations, which in turn reinforce the case for the Fed to hold rates steady. The safe-haven bid that typically accompanies Middle East tensions has been largely neutralised.
Technicians see further vulnerability. Gold is now trading below its short-term moving average of $4,728.38 and well under the medium-term trendline at $4,833.71. The 50-day line, currently at $4,728, has been breached decisively. This does not amount to a free fall — the price remains comfortably above the 12-month low — but it does describe a correction with no clear floor yet.
Gold at a turning point? This analysis reveals what investors need to know now.
The next catalysts are already on the calendar. The Fed will release the minutes from its latest policy meeting on May 20, and the University of Michigan’s inflation expectations survey follows two days later. Until then, the yellow metal is caught between one of the most powerful physical demand stories in history and a macro backdrop that is growing steadily more hostile. If the new Fed chair sticks to the hawkish script, gold could remain on the back foot even as Beijing keeps buying.
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