Gold prices are approaching their weakest quarterly performance in more than a decade after falling roughly 24% from January’s record highs, as higher real interest rates and a stronger U.S. dollar continue to pressure investor demand.
The August Gold Futures contract was trading at US$4,031.70 on Tuesday, leaving bullion on track for its largest quarterly decline since April 2013.
Investors favour downside protection
Market sentiment has deteriorated as traders increasingly hedge against additional losses.
For the first time since 2016, gold’s put/call skew has turned positive, signalling stronger demand for downside protection than for upside exposure.
Goldman Sachs commodities executive Samantha Dart described the shift as a significant change in positioning but argued that the longer-term investment case remains intact.
“Gold is not done,” she wrote in a note published on 29 June. “We continue to see further upside, driven by both structural and eventually cyclical factors. Structurally, EM central bank diversification — following the 2022 freezing of Russia’s reserves — remains the anchor of our $4,900/toz end 2026 forecast.”
Central bank demand continues to underpin the market
An OMFIF survey found that more central banks now intend to reduce dollar holdings than increase them over the coming decade, while a net 30% expect to raise their gold allocations within the next two years.
The report stated that gold “has moved to the centre of reserve management strategy.”
OMFIF Senior Economist Yara Aziz added that “the old assumption that public investors can wait for the environment to normalise looks increasingly unrealistic.”
Source: Original Article
