China gold falls 5.96%

While U.S. tariffs and other factors have added fire to already hot demand for gold as an investment, the impact is different for gold jewellery, according to Andrew Naylor

“In markets like Dubai, this creates a two-fold effect: on one hand, you see stronger interest in gold as a safe-haven asset, on the other, high prices dampen jewellery demand.”

“There are no potential customers nowadays because of the gold prices,” said Fahad Khan, a sales representative at retailer Damas Jewellery.

“Higher gold prices are likely to dampen demand for jewellery, in a classic example of how the best cure for high prices is high prices,” said Russ Mould, investment director at AJ Bell.

Source – Reuters

“What we have seen is the change in the motive for safe-haven buying – from being driven by the Middle East uncertainty to the threat and realisation of tariffs,” said Philip Newman, managing director at consultancy Metals Focus.

“Strikingly, gold was rallying as inflation eased, and it looked as though all of our understanding of how gold prices behaved was being challenged,” said independent analyst Ross Norman.

Nicky Shiels, head of metals strategy at MKS PAMP SA, said that while prices could break out towards $3,200, resolution of physical gold dislocations attributed to tariffs and potential structural changes including reduced risk appetite, reduced participation and reduced liquidity are increasingly bearish.

Source – Reuters

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