The Fed Is Hiking. Yields Are Near 5%. China Just Bought Gold for Month 22 Anyway.

Gold opened the week down about half a percent, around $4,354. The reason, according to Kitco, is the usual suspect: Treasury yields near 5% and a firmer dollar are cancelling out the safe-haven bid from the Iran standoff.

Meanwhile, one of the biggest sovereign gold buyers is doing the opposite of what the yield curve wants. That’s the story.

The Buyer Who Doesn’t Read the Yield Curve

The People’s Bank of China added 20.2 tonnes of gold in August. Kitco reports that’s the largest monthly purchase since October 2023. It was the 22nd straight month of additions, and the World Gold Council puts official holdings at 2,387 tonnes at the end of August.

Kitco also counts roughly 80 tonnes added across the first eight months of 2026. Do the math: that’s an average of about 10 tonnes a month. August was double that pace.

Then there’s the number I keep coming back to. The WGC says gold now makes up 9% of China’s foreign exchange reserves, up from 8% in July. One percentage point in a month is a lot for a reserve portfolio that size. I’ll be honest about the limit here: a share like that moves with the gold price as well as with tonnage, so I wouldn’t read all of it as pure appetite. But the tonnage part is not ambiguous. They bought more, not less.

The Fed Is Not the Only Grown-Up in the Room

Last week the Fed raised rates by a quarter point. Kitco says futures show roughly a 53% chance of another hike in October. The 10-year sits near 5%. This is the environment gold bears drew on a whiteboard: a metal that pays nothing, competing with a bond that pays a lot.

And yet the tape isn’t a bloodbath. Silver was actually firmer Monday, around $66.41, up 0.43%. Gold is sagging, not breaking.

Here’s how I’d frame it. A trader has to care what next month’s Fed decision does to next month’s price. A central bank running a reserve diversification plan does not. The PBOC isn’t sitting in front of a rate-odds screen deciding whether to bid. It’s working through a multi-year plan to hold less of one thing and more of another, and 22 months of consistency says the plan isn’t sensitive to a 25-basis-point move.

That doesn’t guarantee gold goes up. It doesn’t. Nothing in this data tells you where the price goes in October. What it tells you is who has been buying through the yield pressure, and that it isn’t acting like a price-sensitive trader.

The Bottom Line

If you buy physical on a schedule, you’ve spent the last few weeks reading headlines that tell you a hiking Fed is bad for your monthly purchase. Sometimes that’s true for a few sessions. It hasn’t been a reason for the PBOC to stop buying, at least not for 22 months.

Watch two things. First, whether October’s hike odds move much from here, because that’s what’s driving the daily price. Second, the PBOC’s next monthly reserve report, because a streak is only a streak until it isn’t. Neither one changes what a boring, repeatable stacking plan looks like. It’s the same plan you had before the Fed met.