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U.S. gold futures fell sharply on Monday in apparent profit-taking by investors after last week’s rally on expectations the Federal Reserve could cut interest rates in September.
In addition, China’s central bank refrained from buying gold for its reserves for a second consecutive month in June, as official data from the People’s Bank of China showed its gold reserves at the end of June remained unchanged from the previous month at 72.8 million ounces.
“It appears that gold prices remain too high and the People’s Bank of China is waiting for a further pullback before resuming its gold buying program,” WisdomTree strategist Nitesh Shah said, according to Reuters.
Open interest in gold rose 9% last week to a six-week high, but the growing interest in gold may have waned, analysts at JP Morgan said, Dow Jones reported.
Comex gold expiring next month (XAUUSD:CUR) for July delivery ended -1.4% at $2,355.20/oz, and July Comex silver (XAGUSD:CUR) was settled -2.4% at $30,618/oz.
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Gold’s record rally is expected to continue through late 2024, with global geopolitical concerns and the macroeconomic outlook supporting further price gains, ING analysts said.
Gold has gained mainly on safe-haven demand coupled with conflicts in Ukraine and the Middle East, as well as central bank buying, even though the US Federal Reserve is keeping interest rates high, ING said, but optimism about rate cuts is growing, with September firmly in play for the Fed’s first cut.
Central bank buying, excluding China, continued in May and demand is expected to remain strong going forward, ING said, adding that global gold ETF flows also turned positive in May.