While gold reached a record high in May at $2,450 per ounce, it has since settled at $2,329 per ounce. According to the World Gold Council, China’s demand for gold fell in May to its lowest level in four years.
China's Reduced Physical Gold Demand Cools Prices After May Peak
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Gold Prices Down from Record High, China Physical Consumption Slumps, Analyst Expects Slight Decline
Gold prices have softened since their peak. Despite China’s continued interest in gold exchange-traded funds, physical gold consumption in the country significantly decreased in May. Bitcoin.com News reported on China’s drawdown in demand on June 8.
“ Gold withdrawals from the SGE amounted to 82t in May, 49t lower m/m and 30t lower y/y,” Jia said. “[T]he elevated gold price dimmed consumer interest in gold [jewelry], leading to weaker-than-expected sales during the five-day International Labour Day Holiday in early May – a traditional demand boost – and this trend continued for the rest of the month.”
Priced at $2,329 per ounce, fine gold has risen 1.5% for the week and 14.4% over the past 90 days. In a note to Bitcoin.com News, Saqib Iqbal, a financial analyst at Trading.biz, predicted a slight decline from current levels. Iqbal discussed the U.S. Federal Reserve’s silence on rate cuts and China’s reduced demand last month.
“I think gold prices will come down given the Fed maintains its cautious approach,” the Trading.biz market analyst explained. “Last night we saw [Jerome] Powell articulately not giving any hints on the rate cut. I see [ gold] prices ranging [from] $2250-$2300 in the coming month. If we do get consistent softer [consumer price index] CPI reports and the unemployment rate edging higher, it’ll allow the Feds to cut rates in September. Only then can gold prices rise beyond $2.400.”
As the summer months unfold, the gold market faces a period of reassessment. Amid fluctuating demand and uncertain monetary policies, investors and analysts alike will closely watch consumer behavior, inflation trends, and central bank moves. Gold’s recent price movements currently suggest a cautious market environment, where the balance of supply and demand, along with geopolitical and economic developments, will dictate the direction of its value in the near term.
What do you think about current gold markets and the drawdown of demand from China? Share your thoughts and opinions about this subject in the comments section below.
