Physical demand for gold have recently been hovering near their all-time highs. Although they have shown some potential to rise further, the momentum behind this upward trend seems to be losing strength. According to Commerzbank’s commodity expert, Barbara Lambrecht, the current market dynamics suggest a slowdown in growth.
Upward Momentum for Gold Appears to Have Stalled
The anticipation of interest rate cuts has already been factored into gold prices, which has affected further upward movement. This has led to a noticeable change in the demand for physical gold, especially in China, the world’s largest market for gold. While gold imports from Hong Kong to China increased by 6% month-on-month, this growth only appears significant when considering net terms, where the increase was 17%.
Decline in Chinese Gold Purchases
However, despite these increases, the overall level of gold imports remains lower than the average purchases seen in the first three months of the year. In absolute numbers, China imported around 31 tons of gold or 26 tons net. This reduced import activity could be partly attributed to the fact that the Chinese central bank has halted its gold purchases since May.
Hesitant Recovery in ETF Investment
Investment in gold ETFs (Exchange-Traded Funds) is also showing signs of recovery, albeit at a slower pace. ETF holdings are now nearly 3% higher than their multi-year low in mid-May. This increase brings them back to levels last seen in mid-February, indicating a cautious return of investor interest.
Conclusion
In conclusion, while gold prices remain strong, the physical demand for gold is still subdued, particularly in key markets like China. Moreover, ETF investments are only slowly picking up pace. For more detailed insights into gold market trends, visit Daily Gold Signal. For the latest updates, check out their Daily Gold Update.
