Gold Rebounds Above $2,900 Amid Global Market Concerns

Gold prices have recovered, surpassing $2,900 per ounce,
benefiting from the slowdown in the U.S. stock sell-off despite ongoing concerns
about the global economy and monetary policies.

Contents

Market Turbulence
Demand in Asia

Market Turbulence

Gold prices surged above $2,900 per ounce, capitalizing on the slowdown of the sharp sell-off that rattled global markets,
despite persistent investor concerns about the future of the U.S. economy.

This rally followed a slight decline in gold prices on Monday, after former U.S. President Donald Trump stated that the economy might face challenges before improving, as he reshapes trade policies and imposes tariffs.
His remarks fueled concerns about a potential economic recession.
Although gold could face selling pressure during severe market downturns—as investors may liquidate the precious metal to cover losses elsewhere—it remains up 10% since the start of the year, reaching consecutive record highs.

Several factors are driving this strong performance, including fears over economic disruptions caused by U.S. policies, continued gold purchases by central banks, and speculation that the Federal Reserve may implement further interest rate cuts. Lower interest rates enhance gold’s appeal as a safe-haven asset since it does not yield direct financial returns.

Despite the price surge, demand for physical gold in major Asian economies, particularly India and China, has weakened. However, investment flows into gold-backed exchange-traded funds (ETFs) have remained stable, reaching their highest levels since December 2023, according to Bloomberg data.

Demand in Asia

Suki Cooper, an analyst at Standard Chartered, stated in a research note that “gold lacks a strong demand base in the physical market” due to weak demand in India and China.
Nevertheless, markets are expected to witness new record highs this year,
provided that investment flows into gold ETFs remain strong enough to offset declining physical demand.

Before the recent market downturn, investors had been reducing their exposure to gold, with hedge funds cutting their bullish positions to the lowest level in nine weeks, according to the latest data from the Commodity Futures Trading Commission.

As of 7:30 a.m. in London, spot gold rose by 0.4% to $2,900.78 per ounce, while the Bloomberg Dollar Spot Index declined by 0.2%.
Silver and palladium posted slight gains, while platinum remained largely unchanged.

Gold Rebounds Above $2,900 Amid Global Market Concerns

Gold Rebounds Above $2,900 Amid Global Market Concerns

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