Gold prices fall as Chinese central bank suspends purchases

Market reaction and analyst opinions

The market reacted strongly to the news from China, causing gold prices to fall by more than 1%. The record high of $2,449.89 per ounce reached on May 20 was largely driven by strong demand from central banks, particularly China. Ole Hansen, head of commodities strategy at Saxo Bank, said that while China is unlikely to permanently stop its gold purchases, the pause indicates a reluctance to buy at record prices. Hansen also noted that despite the current consolidation, the long-term bullish outlook for gold remains unchanged.

Looking Ahead: US Economic Data

Traders are now turning their attention to the US non-farm payrolls report, which could further influence gold prices. A weaker-than-expected jobs report could strengthen the case for a dovish Federal Reserve, potentially reigniting demand for gold as investors seek a safe haven amid lower interest rate expectations. down. Lower rates reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive.

Market Forecast: Cautiously Bullish

In the short term, the outlook for gold remains cautiously optimistic. Although the pause in Chinese gold buying has triggered a sell-off, the possibility of deteriorating US economic data and subsequent rate cuts could support gold prices. Traders should watch U.S. nonfarm payrolls data and policy signals from the Federal Reserve, which will be key in determining gold’s next direction.

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