Gold Shatters $5,500 Barrier as Chinese Sellers Trigger Massive Profit-Taking Frenzy

Gold's relentless bull run just hit a new gear—smashing through the $5,500 ceiling. The catalyst? A wave of profit-taking from Chinese sellers, signaling a pivotal moment where paper gains transform into hard cash.

The Rush to Exit

When an asset surges past a psychological barrier like $5,500, it doesn't just attract buyers—it unleashes sellers sitting on mountains of unrealized gains. The move triggered a classic 'sell the news' event, with Chinese market participants leading the charge to lock in profits. It's the sound of cash registers ringing after a historic rally.

What the Sell-Off Really Means

This isn't panic. It's calculated profit-taking at a key technical level. The surge past $5,500 acted as a signal for many to de-risk, converting speculative positions into realized returns. It reveals the two-sided nature of any parabolic move: for every new believer buying the breakout, there's a seasoned holder cashing out.

The Bigger Picture

While profit-taking creates short-term pressure, it also establishes new support levels and resets the market for the next leg up. Every major seller at $5,500 potentially becomes a future buyer at a lower level—or a regrettant spectator if prices march higher. It's the market's way of breathing between rallies.

So gold hits a milestone and immediately faces a sell-off. In traditional finance, they call this 'healthy consolidation.' In reality, it's just traders doing what they do best—taking profits while the getting's good, because in markets, tomorrow's promise never spends as well as today's cash.

Gold investors cash in profits, driving gold to a 5% decline

China is a leader in gold trading as it remains hostile to digital assets. The record-breaking run has also been propelled by central bank buying to reduce reliance on the US dollar and by strong demand across the board from buyers seeking a safe-haven asset.

China’s central bank bought bullion each month last year. However, it added only 3t in Q4, the lowest since early 2024. That brought its total 2025 net purchases to 27t. China now holds 2,306t, almost 9% of its total reserves.

Traditional jewelry demand in China declined in 2025 due to high prices, falling about 24 % globally, including in China. As the year began, demand was softer, with high prices dampening traditional retail buying.

Many traders are leaning towards selling. However, a gold seller at a Shanghai mall noted there were still “quite a lot of people” buying gold even at elevated levels, as locals see gold as a long-term store of value. 

Meanwhile, global gold prices have fallen 5% after hitting a record high, as investors cashed in on profits. Yesterday, gold prices hit an all-time high of $5,594.82 before pulling back by more than 5% to a low of $5,109.62. 

Gold Futures dropped $300 an ounce in two hours, slicing straight through $5,200 and landing NEAR $5,100. Gold volatility is back at 2008 levels, which suggests this is not a calm pullback. This is forced selling showing up in size.

Analysts turn more bullish on gold but flag volatility 

Analysts at Société Générale said on Monday they expect gold to reach $6,000/oz by year-end. According to them, the forecast was conservative because prices could well go higher. UBS also raised its gold price forecast for the first three quarters of 2026 to $6,200 per ounce. However, the forecasted year-end price is expected to drop to $5,900 per ounce.

On the other hand, ARK Invest CEO Cathie Wood stated that the likelihood of a decline in gold prices is increasing. As reported by Cryptopolitan, Wood noted historical monetary indicators suggesting that gold may be at the end of a cycle. Intraday trading showed that gold’s market capitalization relative to the US money supply (M2) reached a historic extreme.

Meanwhile, Tether, a major crypto firm, announced plans to allocate 10%-15% of its investment portfolio into gold bars.  The market cap of gold-backed stablecoins increased dramatically, from over $1.3 billion to over $4 billion. Of this, XAU₮ accounted for around 60% of the supply of gold-backed stablecoins in this market, dominating both issuance and circulation. 

The world’s largest gold-backed ETF, SPDR Gold Trust, has also increased its holdings to their highest level in nearly four years.

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