Central Bank Buying Limits Gold's Downside Amid Rising Yields

Gold prices took a significant hit on Wednesday, plummeting by 3% and causing silver to fall by 5%. This sudden drop was attributed to rising bond yields and a strong dollar.

The surge in yields has made gold less attractive as an investment option, increasing the opportunity cost of holding it. However, central banks remain active purchasers of gold, with China and Poland leading the way with 23 tonnes purchased in July.

According to the World Gold Council, central banks have bought around 130 tonnes of gold in the first seven months of this year. Despite elevated prices, official-sector demand has not been deterred.