# Gold Price Selloff: Natixis Warns Central Banks Are Selling
Gold prices may face more downside because central bank selling now looks like a real market driver, according to Natixis. After recovering from a nearly 8% overnight drop, bullion still remains vulnerable if official-sector sales and ETF outflows continue.
Bernard Dahdah, Precious Metals Analyst at Natixis, said in a note on Friday that gold could fall to $4,000 per troy ounce as global economic uncertainty and inflation fears rise. In an updated comment on Monday, he said the latest gold price slump suggests central bank selling is now more than speculation.
Why did Natixis say the gold price selloff points to central bank selling?
Natixis said the latest gold price drop likely reflects central banks selling bullion to defend their currencies or fund energy purchases. Bernard Dahdah argued that the scale of the move cannot be fully explained by inflation fears or a hawkish shift in monetary policy alone.
In his Monday comment, Dahdah said he was "less inclined" to treat the inflation-and-central-bank-pivot narrative as the dominant driver. He noted that if that had been the main reason, the U.S. Dollar Index, or DXY, and the U.S. 10-year yield should have made substantial moves at the same time.
Instead, he said neither the DXY nor the U.S. 10-year yield had really moved that morning. That divergence led Natixis to conclude that official-sector gold selling was a more credible explanation for the sudden weakness in XAUUSD.
What exactly did Bernard Dahdah say?
Bernard Dahdah said: "Our take behind this morning’s drop is that it is likely that some central banks are selling gold to defend their currency and/or to fund energy purchases."
He added that with gold prices dropping sharply late last week and U.S. 10-year yields rising sharply over the past two trading sessions, the market may also have been seeing bigger sales than usual from physically backed ETFs. That means both official and investment flows may have hit the gold price at the same time.
What price levels did Natixis highlight for gold?
Natixis warned that gold could drop to $4,000 an ounce, and Bernard Dahdah said he does not rule out another move below $4,100 per troy ounce. Those are the main downside levels highlighted in the note and follow gold’s nearly 8% overnight fall.
Dahdah first raised the downside warning in his Friday note. He said rising global economic uncertainty and inflation fears could pressure precious metals further, even after gold recovered part of its sharp decline.
At the same time, Natixis does not see the long-term gold trend settling at the lower end of $4,000 per ounce. Dahdah said lower prices should be viewed as a long-term buying opportunity rather than proof that the broader bullion uptrend has ended.
Could gold rise back above $5,000?
Yes, Natixis said gold could return to enduring levels above $5,000 per ounce if the pressure on central banks eases. Dahdah said that if damage to energy infrastructure remains limited and oil prices quickly fall back to pre-war levels, central banks could rebuild their appetite for gold purchases.
That shift would matter because central banks were one of the key forces behind gold’s powerful rally last year. If they return as buyers instead of sellers, safe-haven demand could strengthen the long-term outlook for bullion again.
Why did Natixis reject inflation and hawkish policy as the main explanation?
Natixis said the market reaction did not fully match that narrative. Dahdah argued that a hawkish global monetary-policy shift caused by higher inflation would normally push the U.S. dollar and bond yields sharply higher at the same time as gold fell.
He said that did not happen in a convincing way on Monday morning. Because the DXY and the U.S. 10-year yield did not make substantial simultaneous moves, Natixis believes the selloff had another trigger.
That matters for investors because gold usually reacts strongly to real yields, the dollar, and Federal Reserve expectations. When gold falls without a matching move in those indicators, traders often look for liquidity stress, forced selling, or unusual physical bullion flows.
What other selling pressure did Natixis identify?
Natixis also pointed to physically backed ETF selling. Dahdah said that after gold prices fell sharply late last week and U.S. 10-year yields rose sharply over the past two trading sessions, bigger-than-usual sales from physically backed ETFs may have intensified the decline.
This is important because ETF liquidation can accelerate downside momentum in XAUUSD. When central bank sales and ETF outflows happen together, the gold price can drop much faster than macro fundamentals alone would suggest.
How have the main drivers of gold changed since last year?
Natixis said the two main drivers behind gold’s unprecedented rally last year have now flipped. That change is central to the bank’s more cautious short-term outlook for precious metals.
The source article does not list those two drivers explicitly in detail, but Dahdah makes clear that official-sector buying is no longer providing the same support. If central banks have moved from being significant buyers to forced sellers, a major pillar of the gold market has weakened.
The second pressure point comes from broader market conditions, including rising yields and potential ETF outflows. Together, those shifts create a less supportive backdrop for bullion in the near term.
What does this mean for Indian gold investors?
Indian investors should watch both global gold prices and currency trends because any fall in XAUUSD does not always translate into an equal fall in domestic gold rates. If gold drops toward $4,000 or below $4,100 per ounce, Indian prices could ease, but INR weakness against the U.S. dollar can offset part of that decline.
The central bank angle also matters in India because official-sector activity shapes global bullion sentiment. If more central banks sell gold to support currencies or pay for energy imports, international prices may remain under pressure even when safe-haven demand stays elevated.
For Indian buyers, that creates a mixed picture. Short-term volatility could open better entry points for jewellery demand, bars, coins, and long-term allocation, but import costs, rupee moves, and crude oil trends will remain critical.
Why should Indian investors track oil and energy infrastructure?
Natixis tied the long-term gold outlook to energy markets. Dahdah said that if damage to energy infrastructure is limited and oil prices return quickly to pre-war levels, central banks may regain a stronger appetite for gold purchases.
That link matters for India because higher oil prices can pressure trade balances, inflation expectations, and the rupee. A softer oil market could reduce some macro stress while helping restore broader support for precious metals.
What should investors watch next in the gold market?
Investors should watch for signs of further central bank selling, physically backed ETF outflows, and moves in the U.S. 10-year yield. Those factors will help determine whether gold extends its selloff toward $4,000 per troy ounce or stabilizes and resumes its longer-term uptrend.
Natixis still sees scope for enduring levels above $5,000 per ounce over time if oil falls back to pre-war levels and central banks return as buyers. For now, the key watchpoint for Indian investors is whether this episode proves to be temporary forced selling or the start of a deeper shift in official-sector gold demand.
