Coinvo Trading
Full-Time Trader, Public Trade Commentary
Gold's next major run may have already begun, as the threat of higher rates fades just as China accelerates buying. Gold rose 7.7% in a week, its best since March 2020, after the US lost 23,000 jobs, inflation cooled, retail sales fell 0.6% and September rate-hike odds dropped from about 50% to 31%. China's central bank bought 20 tonnes in July, its largest since 2023 and 21st straight month; Chinese gold ETFs added 8 tonnes in 12 days and imports are up 138% year on year. x.comÂ
China's physical buying near $4,000 and a Fed lagging inflation support gold despite rising rates. Per Bloomberg, the Shanghai Gold Exchange's Au99.99 contract traded roughly 430 tons last week, its busiest week since April; buyers pay in full and take delivery. Gold historically does very well when rates rise while the Fed is behind the curve, as it is now. Warsh is no Volcker, and heavy US debt would constrain him even if he were. x.com x.com x.comÂ
Gold is set to take off as energy-driven stagflation traps the Fed and negative real rates favor it. Today's dovish hold was likely its last chance to hike: once the AI bubble bursts, the Fed loses that option, while current debt-to-GDP rules out Volcker-style hikes without fiscal insolvency. Per Macrotrends' chart, gold rose eightfold from its 1976 low to its 1980 high, equivalent to $32,000 gold over five years in today's terms. x.com x.com x.comÂ
Gold faces continued selling pressure as GLD records its biggest weekly outflow since March. November seasonality often favors gold, but gold is still not bullish beyond a bounce. x.com x.comÂ
Central-bank gold accumulation may be an early warning of inflation, adding to gold's reserve-demand case. Gold's share of non-US central-bank reserves has risen to 24%; the last comparable surge preceded double-digit inflation. Inflation is nowhere near that level today, but central banks buying about 1,000 tonnes a year suggest they do not consider it settled and see debt rising. x.com x.com x.com x.comÂ
Gold has years of central-bank demand ahead because China is still far behind in gold reserves. China's reserves are just 9% gold versus 69% for the US. Per the Sound Money Report, China's central bank added 20 tonnes in July, its largest monthly purchase since October 2023 and its 21st straight month of buying, right through gold's worst quarterly slide in over a decade; that is balance-sheet strategy, not dip-buying. x.comÂ
Rising Treasury yields make non-yielding gold less attractive, setting up one major selloff before the next big rally. Oil above $100 adds inflation and rate pressure; higher yields could lift the dollar, while gold ETF outflows and forced selling in a liquidity crisis add risk. The Benner Cycle flags 2026 as a potential selling period. The long-term bull market is not necessarily over: central banks are still buying and long-term demand remains strong. Gold is not worth chasing at these levels. … Show more
Central-bank stockpiling adds demand for gold amid market weakness. WatcherGuru, citing Fortune, reports central banks buying four times more gold than usual and moving it out of the US. Similar silver buying is suspected, not established; both metals remain favored. x.comÂ
Gold demand may be shifting toward ETFs, which could bring a new wave of buying. Central banks bought 130 tonnes year to date, 19% less than last year's 160, yet gold is still near record highs. China added 20 tonnes in July and Poland 8, while Korea bought $250M of a gold ETF instead of physical gold. Slower central-bank buying alongside strong prices could be a bullish signal. x.comÂ
Gold's failure to rise even after rates pulled back decently challenges the earlier high-rate explanation for its weakness. GLD is close to fresh 11-month lows and just closed at a new 14-month low relative to the S&P 500. Gold has trended down since its parabolic January peak. x.com x.comÂ
Record central-bank buying supports gold. Gold now accounts for over 20% of central-bank reserves, near a multidecade high; notice the trend and adjust accordingly. x.comÂ
