The Gold price rose by 13% in the past quarter, the strongest increase in eight and a half years. Since Friday, the Gold price has been on the retreat, Commerzbank’s commodity analyst Carsten Fritsch notes.

Gold consolidation phase is now imminent

“From the all-time high of $2,685 per troy ounce recorded last Thursday, it has lost a good $50. We had pointed out that the last part of the price increase was no longer justified by interest rate expectations. These had also already gone much too far and were therefore scaled back again somewhat in the last few days. This means that Gold currently lacks a key driving force.”

“Although the CFTC's market positioning data showed a further increase in speculative net long positions in Gold to 219,000 contracts in the last reporting week, the highest level since February 2020, the increase was significantly lower than in the previous week, suggesting that speculative financial investors are becoming more cautious. Should positions now be closed, this would weigh on the price.”

“Physical demand for Gold in Asia is likely to be curbed by the strong price increase and the record high price level. As we reported on Friday, this was already visible in August in the sharp drop in China's Gold imports. The Gold ETFs tracked by Bloomberg recorded inflows for the seventh week in a row. However, the world's largest Gold ETF reported the strongest daily outflow since the end of May on Friday. There are currently several indications that the Gold rally has ended for the time being and that a consolidation phase is now imminent.”