Gold Defies $4,000 Breakdown as Demand Holds Firm
Gold prices are heading for a second consecutive weekly decline as the dollar remains strong and Treasury yields hover near historic highs. The precious metal traded around $4,184 an ounce in Asian hours on Friday, down more than 2% for the week.
The reasons for gold's resilience to breaking below the psychological $4,000 mark are multiple. US-listed gold ETFs attracted a significant inflow of $3.8 billion in September, following August's record additions of $7.9 billion. Globally, gold-backed ETFs saw a record 121-tonne increase in holdings to 4,189 tonnes.
China's central bank has also been a steady buyer, purchasing 20.2 tonnes in August as part of its 22nd consecutive month of gold purchases. This demand is helping to absorb some of the selling pressure on gold.
However, analysts at Bank of America warn that current investment demand may not be sustainable if elevated energy costs continue to keep inflation and yields high. They forecast prices could fall towards $3,750 in the fourth quarter if this scenario plays out.