Gold prices have experienced a significant downturn, falling below $US4000 an ounce as progress in US-China trade negotiations reduced its appeal as a safe-haven asset. Spot gold dropped as much as 3.2 per cent to below $US3990 an ounce, continuing a decline that began last week amid concerns that a record-breaking rally had become unsustainable. Optimism surrounding a potential trade agreement between the world’s two largest economies has eased some of the economic uncertainties and geopolitical tensions that had previously supported the precious metal’s value.
The recent slide follows a blistering rally that propelled gold to a record high of just above $US4380 an ounce the previous week. Signs that the metal had become overbought triggered the reversal. Earlier gains were driven by factors such as debasement trade and expectations of Federal Reserve rate cuts, attracting retail speculators who contributed to pushing prices into overbought territory. Despite the recent pullback, gold remains up by more than 50 per cent this year, supported by robust buying from global central banks.
According to Ole Hansen, head of commodities strategy at Saxo Bank, the current correction in gold prices is overdue, driven by positive developments in trade talks. Hansen suggests that the year’s high may have already been reached, as a deeper correction could prolong the recovery period as traders become more cautious and the stock market continues its upward trajectory.
In related news, nearly 1000 professional gold traders, brokers, and refiners have gathered in Kyoto, Japan, for a conference organised by the London Bullion Market Association. The event has attracted a record number of attendees, reflecting an intensifying competition for talent within the bullion trading sector.
