Geopolitical pulse triggers oversold correction, gold and silver short-term strong rebound

Ask AI · What are the deep long-term impacts of the global central bank gold-buying spree on gold prices?

21st Century Business Herald Reporter Feng Zitong

On April 8, under the catalysis of international geopolitical tensions, precious metal prices regained upward momentum.

As of 3 p.m. on April 8, Wind data showed that London spot gold was at $4,809.8 per ounce, up 2.31% for the day; New York futures (COMEX gold) at $4,861.0 per ounce, a surge of 3.76%, with an intraday high reaching $4,888 per ounce; Shanghai Gold Exchange AU9999 quoted at 1,058.5 yuan per gram, up 30 yuan, nearly 3% increase for the day.

Silver performed even more impressively, with London spot silver at $76.9 per ounce, an increase of over 5% for the day; New York futures (COMEX silver) at $77.74 per ounce, a single-day jump of 7.98%.

“Just a few days ago, I was worried that gold prices would continue to decline, but unexpectedly, they rebounded in a single day.” a personal investor told reporters. He added that on April 7, he bought an additional 10 grams of accumulated gold at about 1,030 yuan per gram, and within less than 24 hours, his unrealized gains exceeded 3%.

In the short term, news of a ceasefire between the U.S. and Iran is the direct catalyst for the rebound in gold prices. In the long term, multiple factors such as normalized geopolitical risks, damaged dollar credibility, and the ongoing central bank gold-buying spree worldwide continue to support gold prices. The latest data shows that the People’s Bank of China has increased its gold holdings for the 17th consecutive month, with March’s purchases reaching a near 13-month high.

Geopolitical Pulses and Oversold Recovery

The trigger comes from the Middle East.

According to Xinhua News Agency, on the evening of April 7 (Eastern Time), U.S. President Trump posted on social media: “I agree to suspend bombing and attacks on Iran for two weeks.” Trump stated that after a call with Pakistan, he agreed to a two-week ceasefire, provided Iran agrees to “fully, immediately, and safely” open the Strait of Hormuz.

Pakistan announced that the ceasefire took effect at 3:30 a.m. Iran time on April 8 (8 a.m. Beijing time on April 8). Subsequently, Iran disclosed 10 terms of the ceasefire, including the withdrawal of U.S. military forces from the Middle East. Negotiations are scheduled to begin on April 10 in Islamabad, Pakistan.

The back-and-forth in U.S.-Iran tensions is merely a microcosm of the ongoing geopolitical risks that have been disturbing global assets in recent years. Since the outbreak of the Russia-Ukraine conflict in 2022, safe-haven demand has been the core driver of long-term upward movement in gold prices.

Regarding the rapid short-term surge in gold prices, Qu Rui, Senior Deputy Director of Research and Development at Dongfang Jincheng, analyzed that this trend is neither simply a market reflection of short-term risk aversion nor a complete reversal of the gold trend. Essentially, it is a recovery after gold was oversold due to geopolitical conflicts causing sharp oil price fluctuations and market liquidity tightening, leading to gold being sold off.

Before this surge, gold and silver had just experienced a deep correction. In March, due to cooling expectations of Federal Reserve rate cuts and factors like the U.S.-Iran situation, international gold prices once fell over 10%. The strong rebound within just a few days highlights the short-term impact of geopolitical factors on precious metal prices.

She further analyzed that, in the long run, geopolitical risks becoming normalized and long-term, the damage to dollar credibility, increased U.S. fiscal risks, the continuation of the Fed’s rate cut cycle, and central banks’ strategic gold purchases will continue to influence the gold market and support upward price trends.

Central Banks’ Continuous Gold Accumulation Reinforces Long-term Support

As a key pillar of gold prices, the global central bank gold-buying spree continues, with China’s central bank increasing its holdings steadily.

On April 7, the State Administration of Foreign Exchange disclosed that by the end of March 2026, China’s gold reserves reached 74.38 million ounces, an increase of 160k ounces (about 5 tons) from the previous month.

This marks the 17th consecutive month of official gold reserve increases, with the highest growth in nearly 13 months. Since Q4 last year, the monthly gold purchase scale has been around 1 ton, making the March increase particularly notable.

Wang Qing, Chief Macro Analyst at Dongfang Jincheng, believes that the 10%-plus decline in international gold prices in March, combined with rising oil prices driven by escalating Middle East tensions, may have been the direct reason for the accelerated central bank purchases that month.

(Data source: Official website of the State Administration of Foreign Exchange; Chart: 21st Century Business Herald Reporter Feng Zitong)

Since the new round of accumulation began in November 2024, the central banks have added a total of 1.58 million ounces of gold, over 44 tons.

The surge in gold prices, coupled with increased gold reserves, has pushed the proportion of gold in China’s total foreign exchange reserves from 5.5% at the end of 2024 to the current 9.13%. As of the end of March 2026, China’s foreign exchange reserves stood at $3.3421 trillion, remaining above $3.3 trillion for eight consecutive months.

However, Wang Qing noted that even with ongoing accumulation, China’s gold reserves still account for a significantly lower proportion of its official international reserves than the global average of about 15%. From the perspective of optimizing reserve structure, enhancing sovereign currency credibility, and cautiously advancing the internationalization of the RMB, continued central bank gold purchases remain a major trend.

According to the World Gold Council, in 2025, global gold demand exceeded 5,000 tons for the first time, with central banks collectively adding 863 tons of gold, providing incremental demand.

Apart from China, many emerging market countries are also main players in this round of gold buying. For example, Poland’s central bank purchased 102 tons of gold in 2025, becoming the world’s largest official gold buyer for the second consecutive year. Currently, Poland’s gold reserves have increased to 550 tons, with gold accounting for 28% of its total foreign exchange reserves. Additionally, Kazakhstan’s National Bank increased its gold holdings by 57 tons in 2025.

However, in the past two weeks, Turkey’s central bank has reduced its gold holdings by nearly 120 tons, sparking market discussion. The World Gold Council projects that in 2026, global central bank gold demand will remain steady, close to 2025 levels.

Market Outlook: Focus on Negotiation Progress, Long-term Bullishness Remains

Regarding short-term trends, Qu Rui proposed three scenario analyses.

If the two-week negotiations fail and Middle East conflict resumes, oil prices will rise again, strengthening the dollar’s safe-haven appeal, leading funds to flow from gold to the dollar and interest-bearing assets, causing gold prices to peak and then decline. If negotiations go smoothly and tensions ease, gold prices could rebound toward $4,900, allowing for gradual profit-taking and reducing risk after safe-haven demand subsides. If negotiations stall and the situation remains uncertain, investors may choose to wait and see, reduce high-frequency trading, and focus more on key data such as the U.S. April non-farm payrolls and CPI.

Looking further into the medium and long term, Xia Yingying, head of the Precious Metals and New Energy Research Group at Nanhua Futures, believes that strategic bullishness on precious metals should continue. She notes that gold prices are mid-term anchored to the Federal Reserve’s monetary policy pace, with rate cut expectations delayed but not reversed—only affecting the pace. In the short term, caution is needed regarding geopolitical fluctuations causing corrections, with attention to negotiation progress during the two-week ceasefire window.

For trading strategies, Xia Yingying suggests viewing corrections as opportunities for medium- and long-term positioning, considering range trading and buying low and selling high in the short term.