China's Mark on Gold: Central Bank Purchases in 22nd Month

The People's Bank of China's uninterrupted gold purchases for 22 months serve as a structural source of demand, supporting prices. However, a sharp 3.8% drop in the last 24 hours and MACD falling below its signal line indicate weakening short-term momentum. RSI at 49 is in neutral territory, with no oversold signal; SMA20 and SMA50 are still trending upward. While the news is positive in the medium term, a close above 47.3 is needed to confirm that the decline has fully stopped in the short term. Therefore, I anticipate a slightly upward but cautious outlook for the next 1-3 days.

The People's Bank of China's uninterrupted gold purchases for 22 months provide a structural source of demand that supports gold prices. However, GLD's latest close at 4292.29 is well above its 20-day simple moving average (SMA20) of 397.22 and 50-day SMA (SMA50) of 402.30, increasing the risk of overbought conditions in the short term. The 14-day relative strength index (RSI14) is at 35.7, in neutral-to-oversold territory, while the moving average convergence divergence (MACD) is negative and below its signal line, indicating weak momentum. Although the news is positive, technical indicators are giving mixed signals; therefore, I expect a limited upward effect in the short term. Nevertheless, continued central bank purchases could limit declines.