Gold Plunges, Nearing $3,900 as Central Bank Demand Cools and US-China Relations Thaw
KYOTO, JAPAN – Gold prices are experiencing a sharp decline, falling to $3,903.45 per ounce in London trading as of 9:31 a.m., a 2% drop and continuing a downward trend sparked by shifting market dynamics. The precious metal’s recent peak and subsequent fall have become a central focus at the London Bullion market Association’s annual precious metals conference in Kyoto, signaling a potential end to the rally that saw gold briefly surge earlier this year.
The price correction is driven by a combination of factors, including waning demand from central banks and a perceived advancement in US-China relations. Analysts at Citigroup predict gold could fall further, perhaps reaching $3,800 an ounce over the next three months, citing the US’s move towards trade deals with China, changing price momentum, and the possible resolution of the US government shutdown as contributing forces. This downturn impacts investors holding gold as a safe haven asset, and also the broader precious metals market, with silver, platinum, and palladium also experiencing significant losses.
“Let others do the hard work and buy tactical rallies after dips,” one trader reportedly advised, reflecting a growing sentiment that further declines are likely. John Reed, a market strategist at the World Gold Council, confirmed that demand from central banks is no longer as robust, suggesting professional traders may welcome a deeper price correction.
The anticipated Federal Reserve interest rate cut,expected to be 25 basis points at the conclusion of their two-day meeting on Wednesday,typically supports precious metals,but has not been enough to counter the prevailing bearish sentiment. Together, markets are closely watching the selection process for the next Federal Reserve Chairman, with five candidates currently under consideration: Christopher waller, Michael Bowman, Kevin Worsh, Kevin Hassett, and Rick Reeder. treasury secretary Scott Besent confirmed the narrowed list on monday.
Alongside gold’s decline, silver fell as much as 2.8% following a 3.7% loss on Monday, while platinum and palladium both dropped more than 3%.
