Gold Holds Near $4,960 as China’s PBOC Extends Gold-Buying Streak to 15 Months

China’s central bank added gold to its reserves again in January, extending a buying streak to 15 consecutive months—an announcement that lands in the middle of one of the most volatile stretches the gold market has seen in decades. Official data showed the People’s Bank of China (PBOC) nudged holdings up to 74.19 million fine troy ounces (from 74.15 million), while the reported value of those reserves rose sharply to $369.58 billion. The update comes after gold’s dramatic whipsaw: a record surge near $5,600/oz in January, a sharp break toward $4,403/oz, and a rebound to roughly $4,960/oz.

The Catalyst: Why China Keeps Stacking Bullion

The immediate “cause” behind today’s headline is simple: the PBOC is still buying. But the underlying drivers look structural rather than tactical.

First, reserve diversification remains a powerful incentive. Central banks globally have kept gold demand historically elevated even at record price levels—an important signal to the market that official-sector appetite can persist through volatility. The World Gold Council’s full-year figures for 2025 show central-bank purchases around 863 tonnes, still exceptionally high by modern standards.

Second, China’s private demand mix is changing in a way that reinforces the official bid. Reuters reporting on China’s 2025 consumption data highlights a striking rotation: gold bars and coins rose ~35% to ~504 tonnes and overtook jewelry for the first time, while jewelry demand fell sharply. In other words, households increasingly treated gold as a balance-sheet asset rather than an adornment.

Third, the broader demand backdrop is supportive. The World Gold Council said global gold demand hit a record ~5,002 tonnes in 2025, driven heavily by investment (including strong ETF interest) even as high prices weighed on jewelry. That matters because investment flows tend to set marginal pricing during fast markets.

Effect: Put together, these forces create a persistent “buy-the-dip” constituency—central banks and investment buyers—making it harder for selloffs to turn into lasting downtrends unless macro conditions shift decisively.

The Tape Tells the Story: Volatility, Positioning, and the “Policy Shock”

If the cause is steady accumulation, the effect on day-to-day trading has been anything but steady. Gold in early 2026 hasn’t behaved like a sleepy defensive asset—it has behaved like a crowded momentum trade.

Reuters noted that gold’s one-week realized volatility spiked above 90% after a speculative surge pushed prices to records and then snapped back violently. That kind of volatility changes market plumbing: leveraged positioning becomes fragile, risk limits trigger faster, and liquidity can evaporate precisely when everyone needs it.

Two accelerants mattered in this drawdown-and-rebound sequence:

• Macro repricing around U.S. monetary leadership. Reporting tied part of the sharp selloff to market interpretation of Kevin Warsh’s nomination as the next Fed chair, which shifted sentiment about the future stance of policy—and, by extension, the “easy money” narrative that had helped buoy precious metals.
• Mechanical deleveraging via higher margins. Reuters described how CME margin increases compounded the decline, forcing some players to cut exposure into weakness—exactly the dynamic that turns a pullback into an air pocket.

A useful historical parallel is that gold’s biggest breaks often combine macro surprise + positioning. When price is being driven by “who must sell” rather than “who wants to sell,” the first move can overshoot fundamentals—then snap back when forced selling exhausts itself.

Impact on market behavior: This episode is likely to keep traders more sensitive to microstructure signals—margin changes, options-implied volatility, and flows—rather than relying solely on macro narratives like inflation hedging or geopolitical risk.

What This Means for 2026: A Higher Floor, But a Wider Range

The PBOC’s continued purchases don’t guarantee higher prices tomorrow, but they do influence the market’s longer-run geometry.

A fictitious (but realistic) way to frame it is how many metals desks think about regime shifts:

“Central-bank buying doesn’t stop corrections—it changes what counts as ‘cheap,’” said Lena Ortiz, senior metals strategist at Meridian Macro Research. “When official demand and retail investment demand both lean the same way, the market can print a higher floor, but it also tends to trade with a wider intraday range because speculative interest follows the trend.”

That “higher floor / wider range” framework fits the current facts:

• Supportive floor: Official accumulation (China included) and record-high recent global demand suggest real money is still engaged even after violent moves.
• Wider range: The same market is now conditioned by extreme volatility, margin sensitivity, and fast-flow speculation—factors that can amplify both rallies and selloffs.

For traders and investors, the practical takeaway is that “gold price” risk in 2026 may be less about guessing direction and more about managing path dependency—how the market gets there.

What to watch next (the investor checklist):

1. PBOC monthly reserve updates (confirmation that official buying persists).
2. China’s investment-vs-jewelry mix (bars/coins demand staying dominant would keep the bid more “financial” than “consumer”).
3. Volatility + margin policy (if volatility remains elevated, further margin tightening can mechanically restrain leverage and cap upside bursts—or trigger fresh liquidation on down moves).

Bottom line: China’s continued gold buying is a meaningful stabilizer in a chaotic tape—but after the recent whipsaw, the bigger edge may come from respecting volatility and watching flows, not from assuming gold will trade like the calm safe haven it used to be.