Key Takeaways:
Gold slid 23% from its January record of $5,589/oz to around $4,330, prompting Chinese financial institutions to reduce exposure to the precious metal.
"We have reduced our gold ETF holdings and are keeping only some tactical positions," a wealth management official at a major Chinese state-owned bank told China Securities Journal on June 9. "We're watching Fed Chair Kevin Warsh's comments at the upcoming meeting to decide next steps."
China Merchants Bank lowered the top-tier expected annual rate on its 91-day gold-linked structured deposit to 1.63% from 1.78%, according to the bank's product documentation. The product, which requires a minimum deposit of 10,000 yuan, now offers three tiers of 1.0%, 1.43% and 1.63% — down from the previous top rate of 1.78%. Multiple wealth management firms have trimmed gold ETF and gold stock ETF allocations from their "Gold+" product strategies, the report said.
The pullback comes as the Iran conflict stokes inflation and raises the prospect of Fed rate hikes, strengthening the dollar and reducing gold's appeal versus yield-bearing assets. Citi Research cut its three-month price target by $300 to $4,000/oz, though it maintained a $5,000 six-to-12-month target. The metal is trading below its 200-day moving average for the first time in nearly three years, a technical signal that has historically preceded extended consolidation periods, according to Citi.
Despite the near-term selling, central banks continue to accumulate gold. The European Central Bank reported that gold's share of global official reserve assets rose to 27% at the end of 2025, surpassing US Treasuries at 22% for the first time. The shift reflects a broader de-dollarization trend among reserve managers, who have added gold to hedge against currency depreciation and geopolitical risk. BlackRock's Nikhil Mehra, head of multi-asset strategies for Asia-Pacific, said his firm typically allocates 2% to 5% of portfolios to gold, adding that it remains a valuable portfolio diversifier.
Goldman Sachs maintained a $5,400 forecast, while DataTrek's Nicholas Colas and Jessica Rabe said gold "rallied too far, too fast" last year and into early 2026, and will likely underperform stocks over the next six to 12 months. COMEX gold recently traded at $4,333/oz. Over the past 20 years, gold has returned 613%, outpacing the S&P 500's 482% gain, according to Bloomberg data.
This article is for informational purposes only and does not constitute investment advice.
