Gold’s all-time highs have now passed, the consolidation phase is now imminent

The price of gold rose 13% in the last quarter, the strongest increase in eight and a half years. Since Friday, the price of gold has been in retreat, notes Carsten Fritsch, commodity analyst at Commerzbank.

Gold’s consolidation phase is now imminent

“From the all-time high of $2,685 per troy ounce last Thursday, it has lost $50. We pointed out that the latter part of the price increase was no longer justified by interest rate expectations. They have already gone way too far and have therefore been scaled down somewhat again in recent days. This means that Gold is currently missing a key driving force.”

“Although the CFTC’s market position data showed a further increase in speculative net long positions in gold to 219,000 contracts in the last reporting week, the highest level since February 2020, the increase was significantly smaller than in the week precedent, suggesting that speculative financial investors are increasingly cautious. If the positions were now closed, this would affect the price.”

“Physical demand for gold in Asia is likely to be dampened by strong price growth and record high prices. As we reported on Friday, this was already visible in August in the sharp decline in China’s gold imports. Gold ETFs tracked by Bloomberg posted inflows for a seventh consecutive week. However, the world’s largest gold ETF reported its strongest daily flow since late May on Friday. Currently, there are several indications that the gold rally is over for the time being and that a consolidation phase is now imminent.”