Breaking: China Steps Back, Sells 1Million Ounces Overnight, Macro Shorts Gold

Goldman’s Trading Desk Comments This Morning

China Steps Back, Sells 1million Ounces Overnight, Macro Traders Step In

Yesterday marked the first session in some time that China did not open its trading day aggressively buying gold. We speculated this could be a signal—an overture to the United States—perhaps a gesture intended to soften the atmosphere for trade negotiations. This would be consistent with Beijing’s broader strategic pattern: overt displays of leverage, such as naval drills near Taiwan, used as proxies for political communication.

While we maintain that possibility remains valid, a more proximate and operational driver is now apparent.

China has begun selling gold, both at the ETF and futures level. This activity picked up last night and is directly tied to upcoming domestic holidays. This is not unprecedented behavior. Historically, China has shown a tendency to curb domestic froth in asset markets by implementing capital controls or instructing state-owned banks to reduce exposure. The mechanism is clear: when price activity in key commodities—especially those tied to strategic reserves or consumer sentiment—gets too hot, Chinese authorities intervene quietly but decisively.

That appears to be what’s happening one day later . As the holiday period approaches, bids have evaporated. In turn, leveraged retail and institutional traders—particularly the Shanghai-style specs—have begun liquidating long futures and ETF positions. The result is a localized selloff with global implications.

The question is not if this unwinds further—it already has—but rather, how much farther it can run.