- China bought 10 tonnes of gold in May, its biggest monthly purchase since January 2025.
- $1.48 trillion was erased from the precious metals market value in 12 hours.
- Citi lowered its gold targets and warned prices could fall to $3,500 amid Iran-US tensions.
Gold and silver prices fell sharply even as China stepped up gold purchases, pushing its reserves to another record. According to data, China’s central bank bought 10 tonnes of gold in May, its largest monthly addition since January 2025.
The move followed an 8-tonne increase in April and marked the third straight month of net purchases. China has now increased its gold holdings for 19 consecutive months, the longest streak since at least 2015.
Official reserves reached 2,331 tonnes, accounting for more than 9% of the country’s foreign exchange reserves. Year-to-date, China has added 27 tonnes, making it the third-largest central bank buyer after Poland and Uzbekistan.
China’s Buying Pace Picks Up
The chart shows China’s purchases accelerating again after a slowdown through much of 2025. Monthly additions rose from around 5 tonnes in March to roughly 8 tonnes in April and 10 tonnes in May, the strongest pace since early 2025.
The increase comes as central banks continue using gold to diversify reserves amid rising geopolitical tensions and concerns over fiat currencies.
Precious Metals See Sharp Selloff
Despite the buying activity, precious metals sold off heavily. Market commentator, The Bull Theory, estimated that $1.48 trillion in market value disappeared from precious metals over a 12-hour period.
Gold fell 4.1%, erasing around $1.22 trillion in market capitalization, while silver dropped 7%, wiping out roughly $260 billion.
Spot gold slipped below $4,300 and later traded under $4,200, marking its lowest level since late March. Spot silver also fell to around $64.
Oil prices climbed as tensions between the United States and Iran intensified, but the safe-haven trade failed to support precious metals in the short term.
Citi Turns Cautious
Citi lowered its outlook for gold and warned prices could fall to $3,500 per ounce if the Strait of Hormuz remains closed through the summer.
The bank also reduced its three-month target to $4,000 from $4,300. Analysts pointed to stronger US economic data and expectations of higher interest rates, factors that tend to pressure non-yielding assets such as gold.
Even so, Citi maintained a bullish long-term outlook and warned that the near-term environment remains highly volatile.
Peter Schiff Sees Opportunity
Long-time gold supporter Peter Schiff argued that markets are mispricing precious metals. He said traders are right to sell tech stocks and cryptocurrencies while bond yields remain elevated, but wrong to dump gold and silver.
According to Schiff, gold falling below $4,300 and silver trading with a $65 handle does not weaken the longer-term outlook.
Schiff added that the bullish case for precious metals has strengthened because of the war and believes prolonged geopolitical tensions would further support gold and silver prices.
Schiff has long argued that inflation, rising debt, and a weaker dollar favor hard assets. He expects gold to continue benefiting from central bank demand and has previously projected prices could eventually reach $5,000.
Related: Gold Exposure Hits 32-Year High as Central Banks and Investors Pile In
Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
