Gold's Rebound Fails, -4.3% from Weekly Record as Shanghai Premium Sinks
Friday, 5/16/2025 16:42
The PRICE of GOLD retreated from an overnight rally on Friday, making its lowest weekly close in 6 after the rebound dented appetite in China, the precious metal's No.1 consumer market, crushing the Shanghai premium.
London's 3pm benchmarking auction came in around $3182 per Troy ounce, down 4.3% from
last Friday's record-high gold week-end fix.
That's close to gold's steepest weekly drop since June 2021.
"With the recent tariff headlines [of new trade deals and discussions], the market is due for a period of consolidation," says Joni Teves, precious metals strategist for Swiss bank and London bullion clearers UBS, predicting a drop towards $3100.
"[But] our expectation is that the Fed continues to ease [US interest] rates, given the downside risks to economic growth. It is key to our bullish gold outlook" of $3600 by mid-2026.
After the US central bank held overnight interest rates unchanged last week, new data today put US consumer sentiment at the worst in 3 years.
After halving this week's previous plunge of 6.1%, yesterday's rebound took global gold bullion quotes back up to £3250 per Troy ounce by the time London opened today.
That rally put Yuan prices 1.7% above yesterday's 5-week low in Shanghai, the wholesale market for all bullion entering China.
But the gap between Chinese and global prices shrank dramatically, cutting the incentive for new imports from $50 per Troy ounce to less than $10 and suggesting much weaker demand.
The Shanghai gold premium averaged $7.75 per ounce over the past 5 years. Last month it touched $65 per ounce, the highest level since October 2023, in the immediate aftermath of the precious metal's latest all-time record high at €830 per gram and $3500 per ounce, spurred by geopolitical, financial and economic uncertainty amid US President Trump hiking trade tariffs.
"The gold price has adjusted a bit in the past few days, and
we are offering great discounts as '520' is approaching," said a salesperson in one Shanghai jewelry store to China's Securities Journal today, looking ahead to May 20th − now a popular Valentines-style gifting event for young couples in China thanks to that date being homophonous with "I love you".
Many branded gold shops have similarly cut their price of gold jewelry below ¥1,000 yuan per gram, the CSJ says, a record high for retail prices when first hit this time last month.
Gold's steep price jump starting in late-2023 has crushed China's world-leading gold jewelry demand, pushing it
below household demand for gold bullion coins and small bars between January and March.
Over in No.2 consumer India, "Demand was better this week, thanks to the price drop," Reuters quotes a bullion dealer in Kolkata.
But compared to import prices including 6% duty plus 3% sales tax, domestic dealers are still offering discounts of more than $30 per ounce, twice the level of last week, the newswire says.
"Multiple factors in the short term may prompt risk appetite to continue to improve, bringing pressure for gold to pull back from highs," says analysis from Chinese bank CICC, warning that if gold's recent "safe-haven premium" evaporates, the price of Comex gold futures could drop through $3000.
Gold priced in UK Pounds also ended the week in London down 4.3% on Friday, its steepest loss at £2394 per Troy ounce since the Pfizer Covid vaccine shock of November 2020.
Euro gold prices fell less steeply, down 3.8% to €2842 but also showing the worst weekly drop in 54 months.
Silver meantime rallied from its 4th drop through $32 per Troy ounce of the past month, losing 1.3% for the week basis London's midday benchmarking auction.
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