Gold fell to its lowest level in about two months on Wednesday, showing that even persistent central-bank buying is struggling to offset the pressure from rising Treasury yields and a stronger U.S. dollar.
Spot gold dropped roughly 1.6% to $4,096 per ounce, while December U.S. futures fell toward $4,122.
At the same time, China continued accumulating bullion. Official reserve data show the country's gold holdings increased again in September, extending the People's Bank of China's purchasing streak to 23 consecutive months.
The contrast is notable because central-bank demand has become one of the strongest structural supports for gold since 2022.
China Keeps Buying as Gold Slides
China's official gold holdings increased from 76.73 million ounces in August to 77.47 million ounces in September, continuing a steady diversification of its reserves.
Only days ago, Coinpaper noted that global gold ETF holdings had reached a record 4,189 tonnes while China added another 20.2 tonnes in August.
That combination of ETF and central-bank demand helped gold remain unusually resilient even as borrowing costs climbed.
But Wednesday's move shows that structural demand does not prevent sharp short-term corrections.
Treasury Yields Are Overpowering Safe-Haven Demand
The biggest immediate problem for gold is the bond market.
The U.S. 10-year Treasury yield has climbed above 5.3%, reaching its highest level in more than two decades. Higher yields increase the opportunity cost of holding gold because bullion produces no income.
The U.S. Dollar Index also rose about 0.7%, making dollar-denominated gold more expensive for overseas buyers.
That is a sharp reversal from just a day earlier, when gold was trading above $4,160 as falling expectations for an immediate Fed hike briefly outweighed high yields. Our latest gold price update highlighted exactly that tension.
Silver, platinum and palladium also fell sharply, suggesting the move extends beyond gold-specific selling.
$4,000 Is Becoming the Key Gold Level
The selloff puts the psychologically important $4,000 level back in focus.
Morgan Stanley has previously identified that area as a potential gold price floor, arguing that physical buying and central-bank demand could become more aggressive after deeper declines.
