Gold’s gravity check: From parabolic to pulled plug in one week

Gold just caught a much-needed reality check. A week ago, Chinese bullion desks were in full beast mode—blasting through 1.2 million ounces across SGE and SHFE, sending spot to a parabolic $3,500 all-time high on record volume. Fast forward past the Labour Day liquidity trap, and nearly a million ounces just got puked back into the tape, erasing the entire April 22 blow-off in the kind of early Asia slippage that punishes anyone caught leaning long.

Despite the onshore fireworks, global ETF flows barely flinched. Institutional and retail positioning stayed sticky—even as open interest in China slipped 5% off peak—suggesting the squeeze was more mechanical than structural. The import arb premium has backed off nearly $20/oz from its highs, signalling the fast-money engine is gassed out, at least for now.

But here’s where it gets tactical: this all unfolded during the dead zone. China’s book moves size when the global liquidity map is running on fumes. Those monster dumps in thin pre-London trade trigger CTA models outside Asia, cascading into a global meltdown tone before the U.S. even brews its first pot of coffee.

Don't be the hero trying to fade or chase this mid-air. Let the unwind do its thing. I’m eyeing $3,200 as the first real level where a base might form—if that cracks cleanly, we could drift into a $3,000 retest zone without breaking a sweat. Gold’s momentum is cooling, China’s flow is unwinding, and the path of least resistance is lower for now. Trade the levels, not the drama.

Western institutions set the tone for gold prices, and buyers in the East usually take the other side of the trade. When prices rise, metal tends to flow from Asia back into London vaults; when prices fall, it moves the other way. Grasping this steady “ebb and flood” is essential for reading the market. In the present bull run, expect London to soak up more gold as Asian demand cools and, in some cases, even flips to net selling.