Gold traders often try to catch the next move before prices make their direction obvious. Getting the setup right can help them understand whether a drop could lead to a recovery or whether f
Gold traders often try to catch the next move before prices make their direction obvious. Getting the setup right can help them understand whether a drop could lead to a recovery or whether further losses remain possible. China’s continued purchases make the latest gold selloff particularly interesting.
Gold price has fallen toward $4,000 despite China’s substantial purchases. That appears contradictory until we examine how gold prices are determined and why physical demand cannot always stop a selloff.
China’s purchases represent demand for physical gold, but global prices respond to transactions across a much broader market. Futures contracts and the London OTC market allow participants to trade gold exposure without exchanging physical bars immediately.
That creates a difference between buying gold for reserves and trading its next price move. China can accumulate bullion over several months, but heavy selling in financial markets can push prices lower within hours.
Leveraged positions can make those declines more forceful. Falling prices can force participants to close positions or meet additional margin requirements. Those sales can deepen the decline even if physical buyers remain active.
The important distinction is timing. China’s purchases support underlying demand, but they do not guarantee an immediate recovery in gold price.
The Kobeissi Letter shared Goldman Sachs estimates that China purchased 25 tonnes of gold through the London OTC market in August. That exceeded the officially reported 20 tonnes by 25%.
The estimated purchases followed 35 tonnes in July, 40 tonnes in June, and 48 tonnes in May. Together, those figures total 148 tonnes across 4 months.
BREAKING: China purchased +25 tonnes of gold in August via the London OTC market, according to Goldman Sachs estimates. This is +25% more than the official +20 tonnes reported by China’s central bank for this month. This also follows estimated purchases of +35, +40, and +48 tonnes in July, June, and May, respectively. Over these 4 months, China’s estimated gold purchases through the OTC market exceeded officially reported purchases by 83 tonnes, or +128%. Meanwhile, global central banks are estimated to have acquired +79 tonnes of gold in August, +365% above the pre-2022 average of +17 tonnes. China is stockpiling gold.
— The Kobeissi Letter (@KobeissiLetter) October 22, 2026
The supplied estimates put that total 83 tonnes above officially reported purchases, a difference of approximately 128%. These figures indicate that China’s accumulation could be considerably larger than its public reserve announcements reveal.
Global central bank demand also remains substantial. Goldman estimated purchases of 79 tonnes in August, approximately 365% above the monthly average of 17 tonnes before 2022.
However, August purchases describe demand during August. They help explain China’s broader accumulation, but they cannot establish the volume purchased during the current October decline.
The clearest pressure comes from the connection between oil prices, inflation, and interest rates. Middle East conflict has lifted Brent crude above $111 per barrel, which creates a difficult backdrop for gold.
Higher energy costs can feed into transport, production, and consumer prices. That makes inflation harder to control and gives the Federal Reserve less room to reduce interest rates.
Gold usually benefits from uncertainty, but this particular chain of events works against it. The inflation threat can increase demand for assets that pay interest because gold itself produces no yield.
The main pressures are closely connected:
Chinese restrictions on leveraged retail precious metals trading also matter. Major commercial banks have suspended services or announced withdrawals from parts of this market. That can reduce speculative participation even as physical purchases continue.
These restrictions affect a different source of demand from central bank reserve purchases. China can therefore accumulate physical gold at the same time that domestic leveraged exposure contracts.
Chinese buying can help absorb supply, especially when lower prices encourage additional purchases. However, a price floor develops only when demand becomes strong enough to prevent sellers from forcing the market lower.
The scale of purchases matters, but their pace matters too. Gradual accumulation may soften a decline without stopping it immediately.
Gold would have a stronger recovery case if continued Chinese demand coincided with lower oil prices and reduced expectations for further monetary tightening. Persistent inflation pressure would make that recovery more difficult.
The question through the remaining months of 2026 is whether physical demand can compensate for the pressure from interest rates and financial market selling.
Gold price declined almost 4% from October 22 into early October 23, based on the supplied price update. XAU reached a low near $3,980 before recovering toward $4,016.
The next major support area is around $3,960. A successful defence of that level could provide a base for a rebound toward $4,100 over the next trading sessions.
However, a sustained break below $3,960 would weaken the recovery setup. Gold could then extend its decline toward the $3,800 area if selling pressure continues.
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Consolidation between $3,960 and $4,100 remains the central scenario if neither buyers nor sellers take control. Price could spend several sessions inside that range before a clearer direction develops.
China’s purchases give gold an underlying source of demand, but the immediate test remains closer to the market price. Whether $3,960 holds could tell us more about the next move than the buying figures alone.
Yes, gold can reach $10,000 per ounce, and several prominent financial analysts, investment firms, and institutional leaders view it as a realistic scenario between 2028 and 2030.
How high will gold go in 2026?Major financial institutions project gold prices to finish 2026 generally between $4,250 and $4,900 per troy ounce, with some aggressive bullish forecasts reaching up to $6,000/oz
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The post Gold Price Today: Here’s Why Gold Is Crashing As China’s Buying It appeared first on CaptainAltcoin.
