Record high prices, China leads gold demand

According to the World Gold Council (WGC) gold market commentary for May, in May, world gold prices maintained a continuous upward trend with an increase of 2%, marking the third consecutive monthly increase.

Despite a smaller increase than in March and April, gold prices still reached an all-time high of $2,427 an ounce in mid-May before falling back.

Despite a slight increase compared to March and April, the world gold price still reached a historical high of 2,427 USD/ounce in mid-May before turning down.

The market excitement has pushed investors' long managed money positions on the COMEX (US commodity futures exchange) to a four-year high.

The WGC’s Gold Yield Allocation Model (GRAM) does not point to any single variable that drove gold’s performance in May. Positive factors include the gold price rally and a weak US dollar, but the impact is not significant. The biggest factor may be the decentralized, off-exchange gold trading and strong central bank buying.

Gold exchange-traded funds (ETFs) recorded their first monthly inflows since May 2023, with a total value of $529 million, increasing total assets under management (AUM) by 2% to $234 billion, the highest level since April 2022. However, the amount of gold in the fund is still 8.2% below the average level in 2023.

ETFs in Europe and Asia drove global flows, with Asia recording its 15th consecutive monthly inflow of $398 million in May, though that was the lowest since November 2023.

Asia has attracted $2.6 billion so far this year, making it the only region to see inflows into ETFs. Total assets under management in Asia have increased by 41%, the highest level on record.

China led the region’s gold demand as domestic gold prices hit record highs and its currency weakened; while Japan saw strong inflows thanks to attractive domestic gold prices.

"The gold market situation depends on US growth and inflation data. In May, the US dollar reversed its rally after a series of increases since early 2024 as inflation trended downward, giving the US Federal Reserve more flexibility in adjusting interest rates," said Shaokai Fan, head of Asia-Pacific (excluding China) and global head of central banking at the WGC.

A weaker US dollar could benefit gold. In addition, the US dollar is heavily influenced by less optimistic economic data and global growth outside the US could weigh on the performance of the currency.

Gold has recently been outperforming the US dollar as buyers in emerging markets appear to be paying less attention to the US dollar or expectations of Western monetary policy.

“A weaker US dollar in the future could attract Western investors back to the gold market who are waiting for a boost,” said Shaokai Fan.

Source: https://thanhnien.vn/gia-cao-ky-luc-trung-quoc-dan-dau-ve-nhu-cau-vang-185240614105133525.htm