Summary:
Gold prices held steady on Wednesday. China’s bullion imports slowed as demand weakened in the face of record prices.
Gold prices were steady on Wednesday amid a light calendar. China’s bullion imports slowed last month as demand in the world’s biggest consumer begins to buckle in the face of record prices.
Overseas purchases of physical gold fell to 136 tons in April, the lowest total for the year, according to the latest customs data. That came after a record amount of Treasury sales by the PBoC in Q1.
The central bank has shown consistent appetite for gold, topping up its holdings for an 18th straight month as it diversifies its reserves and hedges against growing geopolitical uncertainties.
Meanwhile, Chinese gold-backed ETFs saw net inflows of metal for the fifth straight month. This bucks the global trend. Bullion’s recent strength has in large part stemmed from the world’s second largest economy.
But the 10-year Treasury real yield remains above 2%, not far from its highest over a decade it hit in Oct 2023. The gold market could lose lustre when investors believe the worst is over for the government bonds.
Fed Governor Christopher Waller said that the central bank’s restrictive monetary policy is cooling down the inflation, but more work remains to be done. Other rate-setters made similar remarks this week.
The yellow metal has been trading in a tight range this week with the lower end at $2,400 and the upper end at $2,450. A decisive breakout is needed to confirm the next direction in which the price is headed.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in t he material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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