China’s central bank extended its gold-buying streak in April, underscoring sustained sovereign demand. The People’s Bank of China purchased 8 tonnes during the month, its largest addition since December 2024, marking an 18th consecutive month of acquisitions, World Gold Council data showed. China’s official holdings rose to 2,322 tonnes, or about 9% of total reserves, and the PBoC ranked as the third-biggest central-bank buyer in April, behind Poland and Uzbekistan.

The WGC data also showed global central banks returned to net purchases in April after net sales in March, when the immediate economic fallout from the Iran war pushed some emerging-market sovereigns to sell gold to support their currencies. Gold prices almost doubled in 2025 and reached an all-time high of about $5,600 per troy ounce in January, before dropping roughly 23% to around $4,300. The latest pullback has taken the metal below its 200-day simple moving average for the first time since October 2023, following a stronger-than-expected May US jobs report that led markets to price in Federal Reserve rate rises.

Short-Term Pressures And Trading Strategy

We are seeing gold’s recent drop to the $4,300 level as a direct result of a surprisingly strong US jobs report. The latest Non-Farm Payrolls data, which showed 272,000 jobs were added in May, has forced the market to anticipate future interest rate hikes from the Federal Reserve. This strengthens the dollar and bond yields, making non-yielding gold a less attractive short-term holding.

With the price now below its 200-day moving average, the technical picture appears weak, suggesting more downside is possible in the immediate future. For the coming weeks, we believe traders should consider strategies that benefit from this downward momentum or volatility. This could involve buying put options to speculate on a further price drop towards the $4,000 psychological level.

Central Bank Demand And Long-Term Support

However, we must balance this short-term view with the formidable long-term support from central bank buying. The sustained purchasing from institutions like the People’s Bank of China provides a significant floor under the market. This trend is not new; official sector gold buying hit over 1,000 tonnes in both 2022 and 2023, providing a powerful tailwind for the metal.

The PBoC’s recent 18-month buying streak is a powerful signal of strategic accumulation, mirroring a similar 18-month streak that ended in the real world in May 2024. This consistent demand from one of the world’s largest players indicates that any significant price dips are likely to be viewed as buying opportunities by sovereign nations. Therefore, a purely bearish position is risky.

For traders looking beyond the immediate noise of Fed policy, this pullback could be an opportunity to position for the longer term. Selling out-of-the-money puts could be a way to collect premium while setting a lower price at which one would be willing to buy. This strategy profits if gold stays flat or moves higher, capitalizing on the persistent demand from central banks.