The contemporary uncertainty helped enhance the valuable metallic’s safe-haven attraction whereas a reversal of the Trump commerce may catalyze extra promoting exercise, in line with TD Securities commodity strategist Daniel Ghali.
On the identical time, merchants are additionally weighing indicators of shopping for fatigue in Asia, a key pillar in gold’s rally within the first half of the yr. The premium gold on the Shanghai Gold Change held in opposition to its London counterpart since late final yr has flipped to a reduction, signaling falling demand from the Asian nation.
This together with liquidations on SHFE alerts that “the window for draw back is open within the yellow metallic,” Ghali mentioned in a notice.
Gold has surged by greater than 15% this yr, hitting an all-time excessive final week. The dear metallic has been supported by expectations of rate of interest cuts by the US Federal Reserve, robust shopping for by central banks and haven asset demand amid ongoing geopolitical tensions.
Trump’s odds of profitable the US election race have edged decrease since Biden introduced he would step apart, however he stays the entrance runner.
If profitable, his administration may unleash each bullish and bearish forces on gold. As an illustration, the potential for tax cuts, tariffs and duties may push up inflation and power the Fed to extend charges greater than it in any other case would. Greater rates of interest are usually bearish for non-yielding gold. However Trump has additionally signaled a choice for the greenback to weaken, which is doubtlessly bullish for commodities — together with the yellow metallic — priced in that forex.
In the meantime, China’s gold imports plunged final month — the nation has elevated assist for the economic system with shock rate of interest cuts, in search of to prop up development after a scarcity of short-term stimulus.
Change-traded funds added 87,612 troy ounces of gold to their holdings within the final buying and selling session, with whole gold ETF holdings registering a fourth weekly achieve, the longest profitable streak since November. And cash managers’ net-long positions in gold futures just lately hit the very best since early 2020, in line with knowledge from the Commodity Futures Buying and selling Fee.
Spot gold was down 0.1% to $2,397.80 an oz. by 3:43 p.m. in New York. The Bloomberg Greenback Spot Index was down 0.1%, whereas US 10-year Treasury yield edged increased. Silver and platinum fell whereas palladium rose.
(By Yvonne Yue Li and Jack Wittels)