China's central bank continued its sustained accumulation of gold during January, marking the fifteenth straight month of increased reserves. Official figures indicate holdings now stand at 74.19 million fine troy ounces, valued at approximately $369.58 billion.
Market Swings and Margin Adjustments
The precious metal has experienced significant turbulence, briefly surging close to $5,600 per ounce in January before retreating sharply to around $4,403. As of recent trading, prices hovered near $4,960. In response to this heightened volatility, CME Group has raised margin requirements for COMEX 100 Gold Futures from 8% to 9% for certain accounts, effective after Friday's close. This represents the third adjustment since the exchange transitioned to percentage-based margins in mid-January.
Despite a reported 3.75% decline in China's overall gold consumption for 2025 to 950 metric tons, demand for bars and coins within the country jumped by over 35%, constituting more than half of total demand.
Daily Price Action and Trader Sentiment
Gold prices rebounded on Friday, climbing nearly 4% to approach $4,955 per ounce, supported by a weaker U.S. dollar and opportunistic buying. This followed a prior session decline of about 1.8%. Analysts noted the recovery appeared tentative without fresh catalysts. Concurrently, silver experienced even sharper moves, tumbling over 12% in one session to around $77.36.
Market participants are navigating a landscape defined by persistent central bank demand contrasted with increasing costs for leveraged positions. Higher margin requirements could prompt rapid selling if the U.S. dollar strengthens or safe-haven demand diminishes.
Focus Shifts to Upcoming U.S. Data
Investor attention is turning to delayed U.S. economic indicators, now scheduled for release next week following a brief government shutdown. The January employment report is due Wednesday, with Consumer Price Index inflation figures for the same month expected on Friday morning. These releases are anticipated to significantly influence interest rate expectations and currency movements, which are key drivers for gold.
The fundamental question for the bullion market is whether it can maintain its footing near the $5,000 threshold or if recent volatility will lead to a test of lower price levels.
