China Buys the Gold Dip as Gold Defended $4,000 Floor on Tuesday
China snapped up $5.7 billion of gold in the first half of 2026, mostly during the second-quarter price slide, while analysts at Zweig-DiMenna and Morgan Stanley point to oversold conditions and central-bank buying as catalysts for a potential reversal.
China has been quietly accumulating gold as prices have been going down from their January peak, and a growing chorus of analysts now sees the conditions for a meaningful rebound taking shape.
Gold topped out at above $5,500 in January 2026 before retreating to around $4,000 in the recent weeks. But as the metal weakened, China stepped in. Chinese central bank bought about $5.7 billion of gold in the first six months of this year, with the vast majority of those purchases concentrated in Q2, precisely when prices were under the most pressure.
By contrast, China bought just $2 billion in 2025 when gold was surging. Strategists Michael Schaus and Matthew Finkelstein argue the pattern is unambiguous. In other words, China buys the gold dip.
The analysts note that gold is currently trading below its 200-day Moving Average line, a condition they characterize as oversold. In prior episodes of comparable weakness, such as in 1999 and 2022, powerful reversals eventually followed.
Morgan Stanley shares the constructive view. A research note from their commodity strategists sets a year-end gold target of $4,450 per troy ounce, citing accelerated buying from central banks, particularly Poland and China.
For now, those official-sector flows are being offset by selling from ETFs, which accounted for one-fifth of gold demand last year but have been sidelined by the crisis in Iran and the prospect of Federal Reserve rate hikes.
Morgan Stanley's economists diverge from consensus in forecasting the Fed will hold rates steady in 2026, but if the June CPI print signals disinflation is taking hold, two quarter-point cuts in 2027 could draw retail investors and ETFs back into the market.
At the time of this article's writing, gold price has been slowly going up on Tuesday trading session, where it traded at $4,082. On the other hand, silver, platinum, and palladium have also been recovering slowly by about 2-4% in the past 24 hours.
Related assets: Gold, Silver, Palladium, Platinum