The recent rally was driven by expectations of a US Federal Reserve interest rate cut in September.
At 0317 GMT, spot gold was down 0.2% at $2,502.78 an ounce, while U.S. gold futures were up 0.2% at $2,541.80 an ounce.
In India, the price of 24-carat gold fell by ₹353 to ₹7,201.6 per gram on Monday (August 19).
Trends
Of gold The record rally, which took prices to a high of $2,509.65 an ounce last week, has been fueled by optimism over an anticipated rate cut by the US Federal Reserve, rising geopolitical tensions and heavy central bank buying.
These factors have pushed the price of bullion up more than 20% so far this year.
“Gold has been chasing the psychological $2,500 level for several months,” said Tim Waterer, chief market analyst at KCM Trade.
“Now that it has been reached, we are seeing natural profit-taking,” he said, as quoted by Reuters.
US economic data and Fed expectations
Recent US economic data, including stronger-than-expected retail sales and lower jobless claims, along with subdued inflation figures, have renewed confidence in the economy.
This has increased the likelihood of a rate cut by the US Federal Reserve in September, with markets pricing in a 75.5% chance of a 25 basis point cut, according to the CME FedWatch tool cited in the Reuters report.
Investor sentiment remains strong
Despite Monday’s drop, bullish sentiment in the gold market remains strong.
Holdings in the SPDR Gold Trust, the largest gold-backed ETF, rose nearly 1% last Friday.
COMEX gold speculators also significantly increased their net long positions last week.
In addition, several Chinese banks received new gold import quotas.
What should investors do?
With prices near record highs globally and MCX futures on the rise, short-term traders may consider booking profits.
However, central bank demand, potential geopolitical risks and economic uncertainty make gold an attractive long-term hedge.
Monitoring world events, in particular US Federal Reserve Policy Decisions It will be crucial in determining the next direction of gold prices.
Long-term investors may still find value in holding gold, while others may choose to wait for more clarity at the Fed’s Jackson Hole conference later this week.
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