Gold prices saw fluctuations on Monday, with spot gold in London initially dropping by 1.5% to $3,268 per Troy ounce, before recovering above $3,300. Despite the bounce, the price remained 5.1% below last Tuesday’s record high of $3,500.
Global stock markets extended their rebound following US President Donald Trump’s decision to backtrack on imposing 125% tariffs on China and calling for the removal of Federal Reserve chair Jerome Powell. Saxo Bank’s Ole Hansen noted that despite gold’s consolidation, its ability to avoid a deeper correction is questioned amid increasing risk appetite elsewhere. Meanwhile, overall ETF investments and hedge fund positions in gold declined last week, according to data from the CFTC.
Data released on Friday revealed that hedge funds and other leveraged speculators reduced their net bullish positions in Comex gold futures for the fifth consecutive week by last Tuesday, the same day gold hit its all-time high. Despite the reduction in speculative bets, gold prices surged by 25.3% in US Dollar terms, setting 25 new all-time highs.
BullionVault’s analysis shows that such a substantial rise in gold has never occurred during a period of declining speculative positions, except for the global financial crisis peak in September 2011. Bruce Ikemizu of the Japan Bullion Market Association highlighted strong demand from Chinese investors, contrasting with the short-term trading behavior of Western hedge funds.
China’s total consumer demand for gold dropped by 6.0% year-on-year in Q1 2025, driven by a 26.9% slump in jewellery consumption. However, demand for small gold bars and coins surged by 29.8% year-on-year. Shanghai gold has risen 6.9% in April, despite a slight dip today from the previous record highs.
Among gold-backed ETFs, the GLD saw a 0.6% liquidation, slowing its monthly growth to 1.4%. Conversely, the IAU continued to expand at a monthly pace of 2.4%.
Samson Li, an analyst at the Dutch Commodity Discovery Fund, believes that the bull market in gold will persist, driven by China’s desire to hedge against geopolitical tensions. Additionally, US Treasury Secretary Scott Bessent mentioned that the Trump administration is negotiating trade deals with 17 key partners, excluding China.
Meanwhile, Russian President Vladimir Putin declared a 72-hour ceasefire in Ukraine starting May 8, coinciding with the 80th anniversary of the Soviet victory over Nazi Germany. Although the US and Ukrainian presidents discussed potential territorial negotiations, the situation remains complex.
Gold premiums in Shanghai remained elevated at $27 per Troy ounce, three times the typical incentive for new bullion imports. In silver, London prices regained $33 per ounce after dipping below that level in early Asian trading.
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