Gold Prices Ease After Rally, Still Supported by Fed Rate Cut Expectations

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According to the World Gold Council, central banks added a net 22 tonnes of gold to their reserves in June, with Uzbekistan breaking a four-month selling streak by purchasing 9 tonnes. In Q2, global central bank gold buying totaled 166 tonnes, with Poland leading the way by adding 19 tonnes. However, Q2 purchases were down 33% from Q1 levels, reflecting a slight cooling of demand as gold prices have surged nearly 30% this year. Still, ING analysts expect continued buying ahead, driven by geopolitical uncertainty and the desire to reduce reliance on the U.S. dollar.

Gold held its longest winning streak since February, climbing over 3% in just four sessions amid mounting concerns about the U.S. economy. Weak data on the services sector, labor market, and consumer spending are reinforcing fears of a slowdown, largely blamed on ongoing tariffs. This has fueled speculation that the Federal Reserve will cut interest rates at its September meeting—an outcome traders now see as a 90% probability. Lower rates tend to favor gold, which offers no yield but preserves purchasing power. Gold is up nearly 30% so far this year, as investors seek shelter from trade conflicts, geopolitical tensions,

Gold inflows into Shanghai Futures Exchange warehouses have hit a record high, driven by traders exploiting the gap between high-priced futures and cheaper spot gold. With futures trading at a premium amid strong speculative demand, banks and traders are delivering physical gold to the exchange to profit from arbitrage. World Gold Council strategist John Reade said the trend reflects “how strong gold trading demand is in China right now.” Despite a sharp drop in jewelry sales last quarter, demand for bars, coins, and futures remains solid. Over 36 tons of gold have been registered for delivery—nearly double last month’s total—underscoring