Gold prices adjust after recent rally
Gold prices fell on Tuesday as the precious metal continued to adjust after a recent strong rally and the market waited for U.S. data and comments from Federal Reserve officials for more clues on the interest rates path.
Traders pricing in 75% probability of rate cut in November
Spot gold was down 0.3% at $2,311.4 per ounce by 0942 GMT. The non-yielding bullion is down 6% from a record high of $2,449.89 per ounce touched on May 20 amid a rally which happened against traditional headwinds such as a strong dollar and high interest rates.
Additional Insight: The adjustment in gold prices is a common occurrence after a rapid rally period, as investors reassess their positions based on new market information.
Central banks expected to add to gold reserves
“The quarter ahead of us is probably where gold takes a pause before rallying again. Gold had rallied pretty hard in April-May and now it is going through a bit of adjustment to the reality,” Nitesh Shah, commodity strategist at WisdomTree, said.
He forecasts gold price at $2,570 in June 2025, subject to cooling inflation and other factors. The World Gold Council’s annual survey indicated an increasing number of central banks expecting to add to their gold reserves within the next year, suggesting continued strong demand for the precious metal.
Additional Insight: Central banks adding to their gold reserves can provide support for gold prices in the long term, as it signals confidence in the metal as a store of value.
Gold ETFs see outflows, silver struggles
Global physically-backed gold exchange traded funds (ETFs) saw $294 million of net outflows last week, according to the World Gold Council. This marks a departure from the previous two weeks of net inflows. Spot silver fell 1.1% to $29.18, under pressure from lower gold and copper prices.
However, Shah expects silver to receive support in the coming months from a structural market deficit and increasing usage of the metal in solar panels.
Additional Insight: The outflows from gold ETFs may reflect short-term market sentiment, but long-term demand drivers like technological uses for metals like silver can provide ongoing support for their prices.
Platinum and palladium movements
Platinum rose 0.4% to $968.23 as it continued to catch up with part of May’s gold and silver rally. Palladium lost 1.0% to $879.35.
Additional Insight: The movements in platinum and palladium prices often follow trends in the broader precious metals market, but specific supply and demand dynamics in these metals can also impact their prices independently.
Overall, while gold prices may be experiencing a temporary adjustment, factors like central bank purchasing and industrial demand for other precious metals could provide support for the sector in the future.
