Gold demand weakens as price hits new record highs

The upside potential in the gold market may have been largely exhausted after the new record high of $2,600 per troy ounce, notes Barbara Lambrecht, commodities analyst at Commerzbank.

Gold posts another all-time high

“The price of gold celebrated the Fed’s big interest rate change with a new record, hitting $2,600 per troy ounce for the first time. After all, high prices leave their mark on physical demand as well.”

“This was reflected, among other things, in the recent sharp decline in China’s gold imports, which fell to 44.6 tonnes in July, the lowest level in two years. Imports had already fallen sharply in the previous month.”

“New import quotas were allocated to Chinese banks in August, but buying interest is unlikely to be too strong: jewelry demand is weakening and only investment demand is intact. The fact that China’s central bank did not buy gold in August also suggests that Hong Kong’s gold imports will be low.”