XAU/USD Supported as China Extends Gold Buying Streak to 18 Months

Gold (XAU/USD) continues to find strong fundamental support as China's central bank extended its gold reserve accumulation for an 18th consecutive month, reinforcing the broader trend of central bank diversification away from USD-denominated assets. The People's Bank of China's persistent buying underscores a strategic shift amid volatile financial markets driven by US policy uncertainty. Gold has nearly doubled in price since 2025, surging to a high of $5,600 earlier this year before a corrective pullback. The sustained demand from central banks globally, with China leading the charge, provides a structural floor for prices. This trend carries significant implications for the US dollar, as reserve diversification into gold inherently reduces dollar demand. Traders should monitor XAU/USD for potential resumption of the uptrend, with the $5,600 level serving as key resistance and psychological benchmark. Near-term support likely sits around the post-correction consolidation zone. The continued central bank gold buying narrative remains a headwind for USD pairs and a tailwind for commodity-linked currencies like AUD and CAD.