Gold slides but rally should run through year-end, ING analysts say (NYSEARCA:GLD)

U.S. gold futures fell sharply on Monday in apparent profit-taking by investors after last week’s rally over expectations that the Federal Reserve could reduce interest rates in September.

Also, China’s central bank refrained from gold purchases to its reserves for a second straight month in June, as official data from the Peoples Bank of China showed its gold reserves at the end of June unchanged from the previous month at 72.8M oz.

“It appears that gold prices remain a little too high and the PBOC is waiting for a further pullback before resuming its gold purchasing program,” WisdomTree strategist Nitesh Shah said, according to Reuters.

Open interest in gold rose 9% last week to a six-week high, but the increased interest in gold may have waned, J.P. Morgan analysts said, as reported by Dow Jones.

Front-month Comex gold (XAUUSD:CUR) for July delivery finished -1.4% to $2,355.20/oz, and Front Month July Comex silver (XAGUSD:CUR) settled -2.4% to $30.618/oz.

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Gold’s record-breaking rally should continue through the end of 2024, with global geopolitical concerns and the macroeconomic landscape supporting further price increases, ING analysts said.

Gold has mostly gained on safe-haven demand alongside conflicts in Ukraine and the Middle East, as well as central bank buying, despite the U.S. Federal Reserve keeping interest rates high, ING said, but optimism about rate cuts is growing, with September firmly in play for the first Fed cut.

Central bank buying aside from China continued in May, with demand set to remain strong going forward, ING said, adding that global gold ETF flows also turning positive in May.