Monday Metals Market News (8 July 2024) | Gold Dips, Chinese Central Bank Still Not Buying

 

Monday Metals Market News (8 July 2024) | Gold Momentum Slows, China’s Central Bank Bought No Gold in June

Gold prices (-$31.53) dipped this morning. Data released Sunday showed that the People’s Bank of China bought no gold in June. This is the second straight month that China’s central bank has paused its gold purchasing efforts. The market reacted strongly to China’s sustained gold suspension, driving the metal down by over $30 since market open. This correction follows a price spike that drove gold to a monthly high last Friday. 

The silver market (-$.37) also floundered today, crashing below $31 before settling at $30.92. The gold-silver ratio remained largely unchanged, stabilizing at around 76.45:1. Silver continues to move in tandem with gold – at least for now. Platinum prices (-$21.83) dipped as well, and rumors of a major platinum mine closure in Montana are an ongoing threat to the metal’s stability above the $1,000 level. 

China’s gold-buying spree has been behind much of the precious metal’s record performance this year. PBOC gold holdings more than doubled from 2016 to 2024, and the Chinese central bank has long been one of the largest government buyers of gold bullion. The bank’s decision to stop buying gold in May extended into June, according to reports that surfaced yesterday. 

Softening institutional backing from China deals a major blow to a bullish gold market. Last week’s performance drove gold to a month-long high as a cooling jobs report revived bets that the Federal Reserve will cut interest rates in one of their upcoming meetings.

Precious Metals Market Analysis (July 2024) | What to Expect From Gold and Silver Markets This Month

Expect volatility in the gold market while investors hedge their bets ahead of additional U.S. economic reports slated for release later this month.

High gold prices may have motivated China’s central bank to stop buying the precious metal, but short-term prospects for the gold remain optimistic. On Friday, gold prices spiked after new employment data from the Bureau of Labor Statistics (BLS) showed that the U.S. job market may be cooling down. A slowing labor market increases the likelihood that the Fed will move to cut interest rates in one of its next meetings. 

Confirmation that China continued to abstain from buying gold for a second consecutive month ate into last week’s gains, but gold still sits just above a one-month high. 

Market News Update: China’s PBOC Keeps Gold Buying on Hold for Second Month – Bloomberg #OxSecurities #Bloomberg #GlobalNews https://t.co/oh2eDQjy1k

— Ox Securities (Global) (@OxSecurities) July 7, 2024

In particular, the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) reports coming later in July will provoke significant speculation in the gold market. Gold bulls, of course, hope that an early interest rate cut from the Fed will rocket gold past its recent all-time high. 

Silver price-action remains strongly correlated with gold market movements. The gold to silver ratio has held consistent at the 76-78:1 range since the beginning of July and has only breached the 80:1 range for three total days over the past month. Silver’s supply-demand fundamentals are still strong – The Silver Institute projects a record supply deficit this year as the Chinese solar panel industry continues its explosive growth. 

On the year, silver is up nearly 24%.