The most popular gold among Chinese people experienced significant volatility in April, with gold prices surging to $3,400 last month and then dropping to $3,211. Economictimes reports that the decline in gold prices may be influenced by the easing of global trade tensions, coupled with China's long May Day holiday, during which the market was closed. This leading gold-holding country has seen more selling than buying, leading to a short-term liquidity vacuum.
Economictimes reminds that focus will be on next week's U.S. non-farm payroll report to gauge future economic outlook. Data released last Wednesday showed that the overall U.S. economy was in recession during the first quarter, with businesses in a wait-and-see mode regarding Trump's tariff sanctions and potential developments. As many companies rushed to import large quantities of goods before tariff sanctions, consumers hoarded products, leading to a temporary flat personal consumption index in March. All eyes are currently on the U.S. non-farm payroll wage report scheduled for release on Friday. Federal Reserve policymakers stated that interest rates will remain unchanged unless there are clear signs of inflation dropping to 2% or a continued deterioration in the labor market.
Analysts believe that Trump's recent statements about engaging in goodwill trade negotiations with countries like China, India, Japan, and South Korea have slightly alleviated global trade tensions, greatly boosting investor confidence and leading them back to high-risk financial products. This is also a reason for the decline in gold prices; the following is a comprehensive analysis.
Trade tensions ease, gold profit-taking occurs.
Bob Haberkorn, a senior market strategist at RJO Futures, believes there are signs that the U.S. and China are about to reach a trade agreement, and that China has begun to engage with the Trump administration, causing riskier financial products to heat up. This has led to profit-taking in traditional safe-haven assets like gold.
Trump has stated that he will reach a trade agreement with countries like China and Japan.
Trump has indicated a possibility of reaching trade agreements with China, India, Japan, and South Korea, stating that it is a good opportunity to reach an agreement with China. Additionally, according to Reuters, Chinese state media's social media accounts claim that the U.S. has engaged with China to seek negotiations regarding Trump's 145% tariff. Investor panic is gradually calming, returning to high-risk investment markets.
China's long holiday causes a liquidity vacuum.
TD Securities stated in a report that gold is experiencing a liquidity vacuum due to China's long holiday. A liquidity vacuum occurs when the spread between the buying and selling prices of financial products widens and processing costs become too high.
Is gold still the top choice for preserving value?
Gold's status remains intact. Ole Hansen, head of commodity strategy at Saxo Bank, believes that market sentiment has caused short-term profit-taking in gold, but the structural driving factors supporting gold's strength remain solid and reliable.
The current price of gold is $3,241.36, having only increased by 3.69% in the past thirty days, compared to a growth of 17.53% over the past six months. In terms of percentage increase, the rise in gold is not as quick as before, while Bitcoin, known as digital gold, has grown by 14.65% in the past month. In summary, gold may not plummet again in the future, but overall data shows that its profit growth is quite slow. Pure market observation, not any investment advice.
This article states that gold has fallen from $3,400 to $3,211! Analysts predict it may continue to fall in the future? Originally appeared in Chain News ABMedia.
