GOLD PRICES rallied back above $3300 per Troy ounce on Monday as new data said China's gold investing demand has leapt while speculators in US Comex futures and options cut their bullish bets yet again, writes Atsuko Whitehouse at BullionVault.
Spot gold in London fell as much as 1.5% to $3268 per Troy ounce on Monday morning before reversing that loss. But back above $3300, it remained 5.1% below last Tuesday morning's blowout top of $3500 gold.
Global stock markets extended their rebound after US President Trump back-tracked on hitting China with 125% tariffs as well as on calling to fire Federal Reserve chief Jerome Powell.
"Gold continues to consolidate [but] questions are being raised about its ability to avoid a deeper correction amid rising risk appetite elsewhere," says derivatives platform Saxo Bank's commodity strategist Ole Hansen, noting that ETF investing overall shrank last week, joining hedge funds in the US Comex futures market in reducing speculative positions overall.
Data released on Friday by US regulators the CFTC show that by last Tuesday, when spot gold prices hit their new all-time high of $3500, hedge funds and other leveraged speculators in Comex gold futures and options had cut their net bullish betting for the 5th week in a row, down to the lowest level since the end of February 2024.
Indeed, barring the middle of March, the Managed Money's net long position has declined every week since 21 January, the day after President Donald Trump returned to office.
But while the net speculative long position of hedge funds and other leveraged traders in Comex gold futures and options has almost halved over that period, down by 46.3%, the price of gold has shot higher, rising by 25.3% in US Dollar terms and setting 25 new all-time record highs.
Analysis by BullionVault says that, across all 13-week periods on CFTC data back to 2006, gold has never risen this much when the Managed Money has cut its net position.
Before 2025 in fact, and other than at gold's global financial crisis peak of September 2011, gold prices never gained 20% or more from 3 months earlier when Managed Money net bullish betting fell.
"Investors in China have been continuously buying gold on dips, which has been much more solid than the short-term trading of Western hedge funds," says Bruce Ikemizu of the Japan Bullion Market Association in his latest note.
"This should support the downside in gold."
Total consumer demand for gold in China fell 6.0% year-on-year across the first quarter of 2025, the China Gold Association reported Monday, blaming the surging price for a 26.9% slump in jewellery consumption.
China's retail investment demand for small gold bars and coins, in contrast, surged 29.8% year-on-year by weight, while the quarterly average bullion price in China − the precious metal's No.1 mining, importing, consumer and central-bank buying nation − rose 37.0% from Q1 2024.
Shanghai gold has since risen 6.9% so far in April alone, albeit dropping ¥51 per gram at today's benchmarking auction from last Tuesday's fresh record high of ¥830.
Among gold-backed ETF investment trusts, the giant US-listed GLD last week liquidated 0.6% to reduce its monthly increase in size to 1.4% for April.
The No.2 gold ETF the IAU meantime continued to expand at a monthly pace of 2.4%.
"The bull market in gold will last for a long time because the Chinese want to hedge against geopolitical tensions," says Samson Li, Hong Kong-based analyst for the Dutch Commodity Discovery Fund.
US Treasury Secretary Scott Bessent said on Sunday that the Trump administration is working on bilateral trade deals with 17 key partners not including China.
He didn't know if Trump had spoken directly with Chinese President Xi Jinping.
Russian President Vladimir Putin meantime declared a 3-day ceasefire in Moscow's war in Ukraine, starting on 8 May to mark the 80th anniversary of the Soviet Union and its US-UK allies' victory against Nazi Germany.
After meeting with Ukrainian President Volodymyr Zelenskyy at the funeral of Pope Frances in Rome on Saturday, US President Trump said he thinks Kyiv is ready to "give up" territory as part of negotiations with Moscow, despite Zelenskyy stating last week that Ukraine could not accept US recognition of Russia's annexation of Crimea.
Gold prices on the Shanghai Gold Exchange today showed a premium over London quotes equal to $27 per Troy ounce. Down from $60 on Friday, the highest level since October 2023, that still offered more than 3 times the typical incentive for new imports of bullion.
London silver meantime reclaimed the $33 per ounce level on Monday after falling 30 cents below during Asian trade.
Source: https://www.bullionvault.com
Bd-pratidin English/Lutful Hoque
