Societe Generale Sees the Gold Recovery Broadening as Beijing Buys the Dip and the Old Real-Rate Model Breaks Down

In its September 2 Conviction Thinking report, SG notes that gold entered 2026 following an exceptional 64% rally in 2025, surged above $5,400 in January and subsequently suffered two violent corrections. The second, driven by the U.S.-Israel-Iran conflict and renewed expectations for Federal Reserve hikes, briefly pushed gold below $4,000 in July. Since then, Chinese central-bank dip-buying and Treasury’s surprise decision to double long-end buybacks have helped lift the metal back toward $4,500.

The recovery is also becoming healthier.

Gold volatility exceeded 45 during both the January correction and the Middle East turmoil before falling sharply. CFTC speculative positioning has recovered from 154,260 contracts in May to 243,334, above its two-year average of roughly 221,000 but still well below the 2024 peak. At the same time, the GLD put/call ratio fell to a six-month low, indicating that options positioning is again tilting toward calls.

Gold volatility has normalized while speculative longs and call demand rebuild from the spring washout

The Real-Rate Model Is Losing Its Grip

Historically, persistently positive real yields at today’s levels would have implied considerably lower gold prices. Instead, bullion remains near record territory. SG attributes the divergence to a post-2022 regime shift in which central-bank accumulation, geopolitical uncertainty, sovereign-debt concerns and de-dollarisation have created a higher structural floor beneath gold. That does not make gold immune to rates. It means rates no longer explain the entire market.

The Dollar Is Becoming More Important

SG calculates gold’s 2026 correlation with the dollar index at -81%, while the relationship with the trade-weighted dollar stands at -70%.

Dollar weakness has become one of the strongest immediate drivers of the latest gold recovery.

The reserve story reinforces that trend. The dollar’s share of global foreign-exchange reserves fell to 57% in 2025, more than five percentage points below 2022. Meanwhile, 62% of reserve managers surveyed expect the dollar’s share to decline moderately over the next five years.

China Is Making the Trade Explicit

• Gold holdings have increased 20% since 2022 and 122% since 2015.

• At the same time, China’s holdings of U.S. Treasuries have fallen 41% since 2020.

• That pairing is more important than either number alone.

• One reserve asset is rising while the other declines.

SG explicitly describes the combination as evidence of China’s gradual diversification away from dollar-denominated assets.

China: Gold Up, Treasuries Down

China’s reserve shift is increasingly visible in the opposite trajectories of gold and U.S. Treasury holdings.

China has also been buying weakness. The report characterizes recent PBOC activity as dip-buying, reinforcing the idea that price corrections are increasingly being met by structural official-sector demand rather than triggering prolonged liquidation.

Poland is following an even more aggressive path. The National Bank of Poland purchased 82 tonnes through July 2026 and is now only 68 tonnes away from its publicly stated 700-tonne reserve target.

Central Banks Still Want More

In the World Gold Council survey cited by SG, 84% of reserve managers expect gold to represent a larger share of global reserves over the next five years, up from 76% in 2025. And 89% expect global central-bank gold reserves to increase over the next twelve months.