Gold Price Diverges from Central Banks' Buying Spree

Gold's price fell by 0.7% on Monday to around $4,402 an ounce, despite Brent crude reaching a six-week high following the first direct US-Iran naval exchange of fire in the Strait of Hormuz.

This divergence was seen as evidence that markets have priced the war as contained. However, the Commodity Futures Trading Commission's (CFTC) data shows a different story: large speculators cut their net long gold futures position by around 15,000 contracts in the week leading up to it, unwinding into a stronger dollar and firmer Treasury yields.

Central banks, on the other hand, purchased gold at the fastest pace in over a year during the worst quarterly price drop for gold since 2013, according to the World Gold Council's most recent quarterly data.