Gold Finds Support as Central Banks Step Up Buying

Gold spent another week pulled between two forces. Higher interest rates, a firmer dollar and elevated oil prices weighed on prices in the short term. Central bank purchases and long-term demand continued to provide a solid floor. By Thursday, bullion was recovering as Chinese buyers returned to the market after a weeklong holiday.

The pressure peaked on Wednesday, October 7. Front-month Comex gold settled down 1.1% at $4,113.80 a troy ounce, its third decline in four sessions and its lowest close since early August. Silver fell 2.1% to $59.90. The dollar index rose 0.3% to 102.19, making gold more expensive for overseas buyers. Part of the move came after reports that the White House was weighing options to strike Iran, a reminder of how closely gold has tracked energy prices since the conflict began in late February. Higher oil costs feed inflation, and inflation keeps the Federal Reserve on a tightening path, which weighs on a metal that pays no interest.

The minutes from the Fed’s September meeting, released Wednesday, clarified that path. All 19 policymakers backed the September hike, and most expected another increase would be appropriate by year-end. They did not, however, make an urgent case for a move in October. Markets now price only about a one-in-five chance of an October hike, rising to roughly 80% by December. Gold reacted calmly, and New York futures edged up 0.1% to $4,143.40 in early trading Thursday. Spot gold rose 0.3% to $4,122.28 in London.

Central bank demand was the most important story of the week. The People’s Bank of China, one of the world’s largest gold buyers, added about 23 tons to its reserves in September, its biggest monthly purchase since 2023. Central bankers meeting in Italy this week also highlighted gold’s role in diversifying reserves amid geopolitical uncertainty. That is a meaningful signal. Official buyers tend to treat price weakness as an opportunity rather than a reason to step back.

Analysts see the recent correction as a pause rather than a change in direction. Phillip Nova’s Priyanka Sachdeva noted that gold’s structural drivers remain in place, with geopolitical uncertainty and fragile Middle East oil flows keeping investors engaged. She pointed to $4,000 an ounce as a key level where staggered, conviction-based buying could emerge if the long-term story holds. Saxo Bank described the market as a contest between short-term traders selling in response to higher funding costs and a stronger dollar, and longer-term investors buying protection against rising government debt and borrowing costs.

Zaye Capital Markets’ Naeem Aslam framed what comes next in simple terms. A hawkish Fed tone could lift yields and the dollar and add short-term pressure. A softer tone could pull real yields lower and strengthen demand for bullion.

Gold is headed for a third weekly decline, and near-term direction will depend on oil, Treasury yields and the Fed’s December decision. Underneath the price action, the buyers who matter most for long-term demand, central banks and Chinese investors, are still in the market.

Sources:

Harrup, Anthony, Sherry Qin, Giulia Petroni, and Megan Cheah. “Gold Futures Fall on Stronger Dollar, High Yields.” The Wall Street Journal, 7 October 2026, https://www.wsj.com/finance/commodities-futures/gold-ticks-lower-as-investors-await-fed-meeting-minutes-1e95b0b1?mod=Searchresults&pos=2&page=1

Ryan, Jack, and Wendy Wells. “Gold Recovers as Chinese Buyers Return From Weeklong Holiday.” Bloomberg, 7 October 2026. Updated 8 October 2026, https://www.bloomberg.com/news/articles/2026-10-07/gold-near-nine-week-low-on-prospects-for-rate-hike-by-year-end

Petroni, Giulia. “Why Gold Is Rising After Fed Minutes.” Barron’s, 8 October 2026, https://www.barrons.com/livecoverage/stock-market-news-today-100826/card/why-gold-is-rising-after-fed-minutes-Ur0ikk3ChoqSm4432HkT?mod=searchresults_article&pos=1