Gold Falls Thru' $3300 as Shanghai Discount Outweighs Comex Bulls
Tuesday, 5/27/2025 16:46
The PRICE of GOLD extended yesterday's drop from its new record-high weekly level on Tuesday, with traders in London bullion and New York Comex futures returning from a long holiday weekend to find Shanghai gold trading cheaper than global quotes for the first time in more than 2 months.
Today's London gold price then fell through $3300 per Troy ounce − a record high when first hit 6 weeks ago − as global stock markets rose together with Western government bond prices, easing the cost of borrowing, after US President Donald Trump extended his deadline for European exporters to face 50% trade tariffs amid ongoing talks.
"Continued
uncertainty over US policy has been supportive over the past fortnight," says brokerage StoneX's chief precious metals analyst Rhona O'Connell, "although the rapid change in [Trump's] proposed 50% tariffs on the EU has generated a fall over the past weekend."
Overnight, gold prices in Shanghai − entry point for all bullion into private circulation in China, the precious metal's No.1 mining, importing, consumer and central-bank buying nation − had already fallen for the 3rd session running, hitting a 1-week low of ¥768 per gram.
Converted into US Dollar terms, that came $1.50 per ounce below London bullion quotes, the first such discount since mid-March.
Last month's new
record global gold price of $3500 coincided with Shanghai premiums surging to 19-month highs above $60 per ounce, reviving talk that
China's demand and supply is now driving global gold prices and offering more than 8 times the typical incentive for traders to buy bullion in London and export it eastwards.
"The latest trade statistics from Hong Kong reinforce the anecdotal evidence of a resurgence in Chinese demand," says O'Connell at StoneX, after new data said total gold imports into China jumped by almost 3/4 last month, with net imports through Hong Kong leaping almost 9-fold from March to the most in 13 months.
China's imports of gold, net of exports, sank in January-to-March to the lowest quarterly total since 2021, the mining industry's World Gold Council said last week, down more than 85% from Q1 last year as
jewelry demand sank in the face of record-high prices, overtaken by retail bar and coin purchases for the first time on modern records.
Gold imports to India, which has no domestic mine output, last month fell more than 1/5th by weight from 12 months earlier according to analysis by specialist consultancy Metals Focus.
"Prices were falling and buyers began to buy," said a New Delhi jeweler on Friday as global prices rallied to set those new weekend highs.
"But now that the prices rebounded, buyers are stepping back from the market again," with domestic dealers having to quote discounts of almost $50 per ounce versus the official, legal price of new bullion imports after accounting for import duty and sales tax.
Gold's steep price rally last week was preceded by speculative traders in Comex gold futures and options raising their bullish betting for the first time in almost 2 months, data from US regulators the CFTC said Friday.
Net of their bearish positions as a group, hedge funds and other 'Managed Money' traders grew their bullish gold Comex betting by 7.0% after cutting it to the smallest in almost 15 months, even as the bullion price rose to fresh record highs, peaking at $3500.
The Dollar meantime rallied on Tuesday from its lowest level in 5 weeks against other major Western currencies, rising 0.7% on the DXY index.
The US currency also rallied against the Chinese Yuan after hitting its weakest since start-November in Monday's holiday-thinned trade, rallying almost 0.4% from that 29-week low.
That Dollar strength curbed the retreat in gold prices for non-US investors, but the UK gold price in Pounds per ounce still fixed at Tuesday's 3pm London benchmarking auction at a 1-week low beneath £2430, while the price in Euros fixed back beneath €2900.
Dollar gold prices fixed around $3288 per Troy ounce, some 1.6% beneath last week's record-high Friday finish.
Other news today said Japan may cut its new issuance of long-dated government debt to try stemming
the panic in JGBs, newswire Reuters reports, citing un-named Tokyo officials.
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