Gold prices fell internationally, China's gold purchases halted

Gold prices fell more than 2% globally on Friday, with two main reasons behind them. First, higher-than-expected employment growth in the US and a halt in gold purchases by China.

Benchmark gold futures dropped 2.43% to US$2,332.85 per ounce. Analysts linked the fall to solid US job figures, which could signal a pause in the Federal Reserve's anticipated interest rate cuts. Low interest rates tend to make gold, a non-yielding asset, more appealing to investors.

China's central bank reportedly ceased adding to its gold holdings in May, ending an 18-month streak of acquisitions. The interruption by a large buyer dampened investor sentiment even more.

The price decline is a slight correction following a big surge in gold. Despite the current decrease, gold prices remain up around 15% this year.

The surge in gold price can be attributed to several factors, including prolonged geopolitical tensions in Western Asia, central bank purchases (including purchases by the Reserve Bank of India), and continued physical demand.

Gold's scarcity makes it highly sensitive to supply and demand imbalances, potentially leading to sharp price fluctuations. With its inherent value, gold has historically served as a safe haven asset, especially during economic or political turmoil.

While the World Gold Council's initial forecast for 2024 may need to be revised due to the recent price drop, gold remains likely to perform strongly this year.