The prices of gold extended its last week’s losses and declined anew on Monday. Last week, the yellow metal recorded its highest weekly decline since March. The steep drop from a record high of $2,072.50 on August 7 led investors to reassess their positions on the bullion. They are also waiting for the release of the minutes of the last policy meeting of the Federal Reserve on Wednesday.
Spot gold is currently trading at $1,955.08 per ounce as of 0811 GMT.
John Sharma, an economist with the National Australia Bank, commented that gold’s upward trajectory was stifled by the lack of negative economic news, profit-booking by investors and an increase in U.S. bond yields. However, he noted that gold is still supported by sound fundamentals.
Another factor that weighs on gold is the possible easing of the tensions between the U.S. and China. Though the scheduled review of the Phase 1 trade agreement on August 15 was postponed, China ramped up its purchase of U.S. energy and farm products. Chinese state-owned oil companies have booked at least 20 million barrels of U.S. crude oil for August and September. China also purchased 126,000 of soybeans last week, according to the U.S. Department of Agriculture.
Meanwhile, Reuters’ data show that the coronavirus has infected more than 21.58 million and killed 766,383 people around the world. The pandemic continues to wreak havoc on the global economy. The Japanese economy contracted for the third consecutive quarter, the worst in the country’s record. In the U.S., retail sales in July grew less than expected and it is projected to slow down further in the coming months.
In a related development, the U.S. Commodity Futures Trading Commission (CFTC) reported on Friday that market speculators lowered their bullish stance in COMEX gold contracts for the week that ended on August 11. Also, the holdings of the largest gold-backed exchange-traded fund in the world SPDR Gold Trust dropped by 0.30% on Friday on 1,248.29 tons.