Gold News

Gold Snaps Record Price Run, Sinks $30 on CPI Inflation as Pundits Split on 'Bubble'

The GOLD PRICE fell almost $30 inside 90 minutes Tuesday lunchtime in London, trading back down to what was a new all-time high last Thursday, after US inflation data came in slightly stronger than analysts expected.
Snapping its longest run of new records since summer 2020, gold had already failed to set a fresh high at today's Shanghai price benchmarking for the 1st time in 7 sessions, and it also broke a run of 6 new records at London's gold benchmarking at 10:30am.
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The headline pace of US consumer price-index inflation then came in one tick higher than January at 3.2% per year on February's data, while last month's pace of core inflation – excluding fuel and food prices – slowed only to 3.8% against the consensus forecast of 3.7%.
That saw market expectations for the Federal Reserve's end-2024 interest rate rise to 4.54%, the highest in over a week.
Chart of gold price in Dollars (right axis, inverted) vs. market-derived Fed interest rate outlook for end-2024. Source: BullionVault
"The gold bubble looks ready to burst," claimed a technical analysis overnight of gold price charts posted on one spreadbetting news, data and views site.
"A steep slide awaits the yellow metal."
But "Gold: This breakout is unambiguous," declares a coin dealer in Germany, writing on the same site about last week's move.
"Regardless of short-term pullbacks or interim consolidations, this likely signifies only the beginning of the next major uptrend in the precious metals sector!"
"Sentiment is overwhelmingly skewed net bullish almost everywhere," says a gold trading note from analysts at US financial giant Citi. "However, [the trend] for gold ETFs has turned to outflows."
Bullish betting on Comex gold futures and options leapt last week. But gold-bullion-backed ETFs have in fact been shrinking since October 2020.
Formerly showing a strong and positive correlation with the gold price, those gold trust funds – led by the giant GLD and IAU ETF products listed in New York – have shrunk by more than 1/5th over that time, while the price of bullion has risen by 15.4% in US Dollar terms.
Spot silver today doubled the 1.3% drop in gold prices following the US inflation data, falling from a fresh 2024 high to drop within 3 cents of $24.00 per Troy ounce – a 9-week high when reached last Tuesday.
Silver barely outpaced gold on the way up, adding 7.2% from end-February to last weekend against the 7.1% for the 'safe haven' metal.
"[That was] the wrong way round from the norm," said brokerage StoneX's Rhona O'Connell in a trading note late last week, "and it a warning signal to expect a sharp correction in gold when the move fades."
The UK gold price in Pounds per ounce today fell £7 from the £1700 reached for the first time ever on Friday, while Euro gold prices dropped as low as €1973, down 1.7% from Friday's fresh all-time high above €2000.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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