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LAUNCESTON. — Gold’s impressive rally from May to the start of September has since stalled, even though the drivers of geopolitical tensions and positive investor sentiment remain in place.
What has gone missing is physical demand from the world’s two biggest buyers, China and India, and it’s likely that gold will battle to mount a renewed rally until this source of support returns.
The spot gold price rallied 23 percent from a low of $1 265,85 an ounce on May 2 to a high of $1 557 on September 4 as investors flocked to exchange traded funds (ETFs) amid the ongoing trade dispute between the United States and China, heightened tensions in the Middle East and emerging signs of slower global economic growth.
But since reaching a six-year high, the precious metal has meandered sideways, trading in a narrow range between $1,458 an ounce and $1 535, ending at $1 509,24 on Monday.
A lack of appetite among Chinese and Indian buyers, facing multi-year high prices in local currency terms, is the most likely candidate for gold failing to extend its rally.
Refinitiv GFMS said in its quarterly report on Monday that jewellery demand in the third quarter fell 28 percent from the same period a year earlier to 317 tonnes, the lowest total in the database, which goes back to 2000. — Reuters.
Online Reporter