Recently, gold experienced a notable price correction after hitting record highs. Commerzbank’s commodity strategist, Carsten Fritsch, highlighted this sharp downturn, which followed an impressive surge in prices.
1. Gold Market Volatility
For the past three days, the gold price correction has faced downward pressure, now hovering around $2,400 per troy ounce. This marks a significant drop of approximately $100 from last Wednesday’s peak. Consequently, all the gains following the previous week’s U.S. inflation data release have been erased. The initial price surge was fueled by heightened expectations for interest rate cuts.
2. Influence of Speculative Investors
The rally was further bolstered by an increase in net long positions by speculative investors, reaching levels not seen since March 2020. This speculative activity may have now contributed to selling pressure, potentially impacting current market dynamics. The upcoming CFTC report on Friday could provide further insights into this trend.
Future Rate Cut Projections
Despite recent adjustments, Fed Funds Futures still anticipate a rate cut in September, with a total of two to three cuts expected by year-end. The gold price, currently around $2,400 per troy ounce, aligns more closely with these projections than the previous $2,484 per troy ounce level. As a result, the downward pressure on gold prices may ease, leading to stabilization.
For more updates on the gold market, visit Daily Gold Signal. Stay informed with the latest Daily Gold Update.
