Gold prices continued their recent pullback as market participants awaited the conclusion of the Federal Open Market Committee meeting, which is scheduled to end tomorrow. Comex gold futures recovered from an intraday low of $3,901 to settle at $3,968, reflecting ongoing volatility in the precious metals market.
The current correction follows a remarkable rally that saw bullion prices surge more than 30% over the four-month period leading to last week's record high. According to Bank of America's "Flow Show" report, investor inflows into gold portfolios during this period exceeded the cumulative total recorded over the previous 14 years, underscoring the intensity of recent demand for the precious metal.
With gold prices holding below the psychologically significant $4,000 level, market attention has shifted to the Federal Reserve's forthcoming interest-rate decision and anticipated U.S.-China trade negotiations later this week. Bank of America analysts acknowledged the market's overbought conditions, stating that they "agree that the market has become overbought, which finally gave rise to this week's correction." However, they emphasized that fundamental support for gold remains intact, noting that "for rallies to end, the fundamental backdrop needs to change and so far that has not happened."
The precious metal has declined more than 10.5% from its record high of $4,355 established last week, representing a seven-day correction that has interrupted one of gold's most extended bull runs in history. Silver futures also experienced volatility, touching an exaggerated low of $45.51 before recovering to close at $47.14, registering a gain of $0.31, or 0.66%. The silver market found support from the possibility of easing trade tensions between the world's two largest economies.
Fundamental drivers continue to underpin the precious metals complex. Central bank purchasing has provided substantial support, with China alone accumulating 39.2 tons since resuming its gold acquisitions in November of last year. Meanwhile, gold-backed exchange-traded funds have attracted billions in new capital, with aggregate additions likely exceeding 100 tons during the three months ending in September. This figure represents more than triple the quarterly average observed over the past eight years, demonstrating sustained institutional and retail interest in gold as an investment vehicle despite the recent price correction.
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