Gold Prices Decline Amid Demand Fluctuations

Gold prices (XAU/USD) were seen trading in the red, hovering around $4,245 during early Asian trading on Monday. The recent drop in precious metals prices follows a period of record highs, which many now view as overextension, coupled with a decrease in physical demand after the festive season. Traders are currently on alert as they await China’s upcoming third-quarter GDP data, along with figures for September’s industrial production and retail sales, all set to be released later today.

Last week ended positively for gold, buoyed by strong demand from India during the festivities and noticeable ETF purchases. Yet, as the underlying fundamentals seem to have already been accounted for, and with physical demand tapering off, the potential for profit-taking and some price stabilization seems likely in the near term. “The fundamentals have been factored in, and as we move past mid-week and demand diminishes, we can expect a correction or consolidation in gold prices,” shared Pranav Ma, vice president at EBG Commodity and Currency Research at JM Financial Services.

Conversely, gold, as a safe-haven asset, might see price increases due to rising trade tensions between the U.S. and China, heightened uncertainties, and various global geopolitical risks. Recently, U.S. trade officials criticized China for implementing further restrictions on rare earth exports, while Beijing accused the U.S. of instigating global chaos with its supply chain interruptions. “Trade uncertainty is definitely one of the factors pushing gold to record highs,” noted Sam Stovall, chief investment strategist at CFRA Research in New York.