Happy Sunday, GoldBuzzers!

While Western headlines were busy with next week's Fed meeting, China made two significant moves in the same month that point in opposite directions - or seem to. Its banks shut something down on Friday, and its customs data showed buying at a two-year high.

In today’s Deep Dive, we'll be connecting those dots, plus a change hitting US gold markets this weekend that isn’t getting much attention.

Let’s get into it. ⬇️

Gold ended Friday pretty much where it started, hovering near $4,055 an ounce after Thursday's slide, while silver clawed back nearly two percent to around $58.20. Both metals are caught in the same story: the Middle East conflict has pushed oil past $100 a barrel, and expensive oil feeds inflation, which gives the Fed reasons to keep rates high.

That matters because metals don't pay interest, so higher rates make them a harder sell. All eyes now turn to Wednesday's Fed decision. A rate hold is still the base case, but the odds have slipped from 87 percent to about 64 percent in a week after stronger-than-expected jobless claims, and markets are pricing in roughly an 80 percent chance of a hike in September.

The ECB held steady on Thursday too, though it hasn't ruled out a September move of its own. The metals are holding their ground for now, but Wednesday will decide whether they get to keep it.

I’m guessing you didn't spend your week reading Chinese customs data over breakfast! If that’s the case, let me tell you what you missed. The June numbers (just published) showed gold imports hitting roughly 173 tonnes, which is the highest monthly total since March 2024 and the third straight monthly increase, up from 163 tonnes in May.

The buying picked up as international prices fell from January's peak near $5,600 an ounce into the $4,000 to $4,100 range, helped along by a firmer yuan.

Central Bank Buying

Banks stocked up on metal to back retail demand, and the People's Bank of China kept adding to reserves too.

It bought about 15 tonnes in June, its biggest monthly purchase since 2023 and its 20th consecutive month of buying, lifting official holdings to roughly 2,346 tonnes. That buying has a mirror image on the other side of the ledger. China's holdings of US Treasuries have fallen from a peak of about $1.3 trillion in 2013 to roughly $659 billion today, near their lowest level since 2008. One reserve asset keeps shrinking while the other keeps growing. That’s hugely significant.

Here's where the Chinese angle gets really interesting. On Friday, several of China's largest banks pulled the plug on the services that let retail clients trade paper gold and silver products linked to the Shanghai Gold Exchange. After the July 24 settlement session, Industrial and Commercial Bank of China, the world's largest bank by assets, stopped offering these products through its apps, online platforms and branches. Postal Savings Bank of China, Ping An Bank, China Guangfa Bank and China Construction Bank did the same. Clients had to close their positions or take physical delivery before the deadline.

Now, the change is narrower than some of the hyped-up headlines suggested. It targets leveraged and deferred-delivery contracts sold to individuals through bank channels. Physical gold is untouched. So are accumulation plans, ETFs and institutional activity on the exchange, and speculative volume can still migrate to the Shanghai Futures Exchange or emerging Hong Kong channels.

Risk Management

The banks framed it as risk management, and you can see why. Gold's pullback of about 27 percent from its January high turned leveraged retail positions into a live problem for clients and banks alike, echoing the caution that followed China's "Crude Oil Treasure" blowup in 2020, when complex commodity products handed retail investors heavy losses.

In practical terms, the move removes one source of leveraged retail speculation that exaggerated both the rally and the correction that followed. It doesn't ban gold ownership, and it doesn't shut down paper markets wholesale. What it may do, gradually, is push some of that demand toward physical metal or non-leveraged vehicles. That will support a more durable bid rather than an overnight price explosion. China's bar and coin demand was already strong earlier in 2026, and the central bank kept buying right through the recent weakness.

Hong Kong’s New Clearing House

There's a second aspect to this story. Hong Kong's Precious Metals Central Clearing Company, a government-owned entity, began trial operations of its central gold clearing and settlement system on July 7.

The platform handles over-the-counter trades, supports physical vaulting, and includes a Delivery Connect link with the Shanghai Gold Exchange. Eleven major banks are participating, including HSBC, JPMorgan and ICBC's Hong Kong arm. The stated aim is to build Hong Kong into an international hub for gold settlement with yuan-friendly features and fewer capital-control frictions than mainland platforms.

Western Markets are Moving the Other Way

On the same Friday that China's banks closed their paper gold windows, CME Group's one-ounce gold futures began trading around the clock - this weekend is the contract's first ever trading session running straight through Saturday and Sunday.

So one major market is tightening retail leverage and building out physical infrastructure while another is extending paper trading hours. Both are responding to the same demand, just with very different assumptions about what gold investors want.

Paper Money vs Gold

Take a step back from the week's mechanics and the pattern is hard to miss. Since Western governments froze Russia's reserves in 2022, China has been steadily swapping the promises of other governments for metal that answers to nobody. Call it insurance or call it conviction, the trade looks the same either way: far fewer Treasuries, far more gold.

Closer to home, miner equities still haven't confirmed last week’s rally in the metals. That's the gap I'll be watching into Wednesday's crucial Fed announcement.

That’s all for this Sunday, folks. See you on Tuesday.

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Rick Adams
Founder, GoldBuzz
rick@goldbuzz.com