China Has Been Buying the Gold Dip, and These Analysts Say a Comeback is Brewing

Central-bank buying should put a floor under the languishing price of gold

Gold topped out at $5417 in January, 2026. Once the price began falling, China started buying.

The price of gold has fallen by a quarter since its all-time high on January 28. More than one analyst thinks it's oversold and that a reversal is coming with buying from central banks the chief locomotive for any move upwards.

The modern gold rush petered out in the first quarter when markets began discounting possible Fed hikes in the future rather than cuts. Analysts Michael Schaus and Matthew Finkelstein at U.S. research boutique Zweig-DiMenna pointed to renewed buying from the Chinese central bank as a very good indication the price might have finally stabilized.

The duo noted that China acquired $5.7 billion of gold in the first half of 2026, with the vast majority of that coming in the second quarter. In 2025 when gold was rallying hard, China bought only $2 billion. In 2023, just before gold began an ascent that would see its price double, China had bought $14 billion.

For Zweig-DiMenna, it's clear that China is buying the dip.

Gold is 10% below its 200-DMA and 'oversold', says Zweig-DiMenna

Schaus and Finkelstein highlight that gold (GC00) is languishing 10% below its 200-day moving average and in previous instances of such weakness, like 1999 or 2022, strong price reversals have occurred. They also warn, however, that after similar moves in 1981 and 2013, gold proceeded to plummet further.

"Context matters", they add but they forecast a "high probability of reversal."

So does Morgan Stanley.

A research report published Wednesday by commodity strategists Amy Gower, Ben Kelson and Martijn Rats sets a year-end target of $4450 per troy ounce for gold and again cites accelerated buying from central banks, notably Poland and China.

At present those central bank purchases are being offset by selling from exchange-traded funds. Last year, Morgan Stanley says, one-fifth of the buying demand for gold originated with ETFs, however that positive sentiment has been disrupted by the Gulf crisis, and the prospect of rate hikes.

ETF buying was a major feature of the 2025 goldrush but but they remain absent for now

Key to how Morgan Stanley sees things panning out is the non-consensus view of the investment bank's economists who believe the Fed will stay on hold in 2026. If, as Morgan Stanley predicts, the recent CPI print for June suggests disinflation has begun, then two cuts of 25 basis points in 2027 are possible. The theory is that will persuade retail investors and ETFs to re-engage.

-Jules Rimmer

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July 21, 2026 07:06 ET (11:06 GMT)

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