Gold Defies Rate Hikes as China and Central Banks Boost Demand

Gold prices have shown resilience in the face of recent global rate hikes, including the US Federal Reserve's decision to raise interest rates by 25 basis points on September 16. The move had initially sent gold prices plummeting to a weekly low near $4,261.80 an ounce, but they quickly rebounded as other market factors eased.

The European Central Bank and the Bank of Japan also raised their key rates in recent weeks, while the Bank of England held steady. However, China remains a significant player in the gold market, with Chinese gold imports exceeding 1,100 tonnes in the first eight months of the year, already surpassing the total for all of 2025.

The People's Bank of China has also been actively buying gold, adding 20.2 tonnes in August and extending its buying streak to 22 months. Other central banks have also increased their purchases, with official-sector buys rebounding to 289 tonnes in the June quarter, a record high.