Gold’s upward momentum is limited by a lack of physical demand

The price of gold is coming off last week’s all-time high and could still go a little higher. But the upward momentum appears to be fading for now, notes Barbara Lambrecht, commodities analyst at Commerzbank.

The upward momentum seems to be disappearing

“After all, some interest rate cut expectations have been priced in. At first glance, the impact of high prices on physical demand for gold in China, the biggest selling market, appears to have eased somewhat: Hong Kong’s gold imports rose 6% from the previous month. In net terms, i.e. excluding exports, the growth was up to 17%.”

“In absolute terms, however, the level remained low compared to average purchases in the first three months at a good 31 tonnes or 26 net tonnes, which was certainly also due to the fact that the Chinese central bank stopped buying. from May.”

“ETF investor buying interest is also recovering, albeit somewhat hesitantly: After all, holdings are now nearly 3% higher than their multi-year lows since mid-May, and therefore as high as they have been mid-February.”