Gold Market Commentary: Gold rally takes a breather in April

Month in review

Looking forward

Weaker momentum and lower yields compete

Gold rose by just 0.1% in April, to US$1,983/oz,1 as the March banking crisis - which had propelled gold sharply higher - abated and drove some profit taking (Table 1).

Our Gold Return Attribution Model (GRAM) indicates that April’s performance was negatively affected by the high return in March as the incipient banking crisis appeared to be well contained (Chart 1). A slight pullback in inflation expectations proved an additional drag.

In contrast, a drop in long-term Treasury yields on softer economic data provided some support and we note that another positive residual may point to continued central bank activity.

In addition, global gold ETFs experienced another month of inflows, mostly into US funds. European gold ETFs saw negligible outflows; a somewhat sanguine development given the weakness we saw for 10 months prior to March. COMEX futures followed suit, increasing longs by a modest 9 tonnes following a very strong March.

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