The gold price fell sharply on Thursday after a significant selloff in China ahead of its Labour Day break, sending the metal鈥檚 price down to its lowest in two weeks.
According to Goldman Sachs trader Adam Gillard, nearly 1 million oz. were sold through the Shanghai Gold Exchange (SGE) and the Shanghai Futures Exchange (SHFE) before the market closed for the Chinese
holiday. This reverses nearly all of the positions bought last week, sending China鈥檚 total onshore gold holdings down by 5% from historic highs.
While China鈥檚 share of global聽open interest聽remains at a high level (about 40%) despite the liquidation, the upward momentum seems to have temporarily peaked, Gillard .
The Chinese selloff took spot gold prices down close to $3,200 an ounce on Thursday morning, a level last seen on April 14.
A report released by Gillard earlier showed that Chinese investors increased their holdings by 1.2 million oz. of gold through the two exchanges last Tuesday, coinciding with the yellow metal鈥檚 record-setting move above $3,500 per ounce.
The recent price movement highlights the significant influence China has on the global gold market. In his note, Gillard pointed out that recent fluctuations in gold prices have 鈥渁lmost all occurred around the opening hours of the Chinese market.鈥�
He also highlighted gold鈥檚 unique status as a 鈥渇low commodity鈥� 鈥� meaning it is especially sensitive to large, sudden shifts in investor sentiment and liquidity.
Still, bullion remains one of the top-performing assets this year, gaining about 23% while setting multiple record highs.