Gold prices rose last week on investor expectations that the Federal Reserve may cut interest rates in September, and then U.S. gold futures fell sharply on Monday as investors apparently took profits.
In addition, China’s central bank did not purchase gold reserves for the second consecutive month in June, which ended the month unchanged from the previous month at 72.8 million ounces, official data from the Chinese central bank showed. In response, WisdomTree strategist Nitesh Shah said, “It seems that the gold price is still a bit too high, and the Chinese central bank is waiting for the gold price to come down further before resuming its gold-buying program.”
Analysts at J.P. Morgan said gold open interest may have waned after a 9% increase last week to a six-week high.
Analysts at the International Group of the Netherlands (ING) said gold’s record rally should continue until the end of 2024 as global geopolitical concerns and the macroeconomic situation support further gains in gold prices. Despite the Federal Reserve maintaining high interest rates, gold prices rose mainly driven up by safe-haven demand, conflicts in Ukraine and the Middle East, and central bank purchases, but optimism is growing for a rate cut, and September will be key to the Fed’s first rate cut. Central banks other than China continued to buy gold in May, with gold demand set to remain strong going forward, and global gold ETF flows turned positive in May.
Juan Carlos Artigas, head of research at the World Gold Council, noted last week that the gold market is not limited to one central bank. Our information suggests that central banks are poised for another strong year. While China’s central bank did not officially purchase any gold last month, other central banks continue to add to their gold reserves.
Front-month Comex gold for July delivery finished -1.4% to $2,355.20/oz, and Front Month July Comex silver settled -2.4% to $30.618/oz.
