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Demand for Physical Gold Declined Sharply

9/5/2022 1:07 PM

Quotes of the XAU/USD pair reached the year's support level at 1700.0 and bounced up slightly.

According to the reports of the world's leading mints, primarily the US, August was the weakest month of this year in terms of sales of the precious metal: the US Mint sold 46,000K ounces of gold in the form of the American Eagle coin, which is 28% lower than in July and 66% down from August 2021 and American Buffalo coin sales were 17,500K ounces, down from 39,500K ounces in July.

Another worrying factor for the asset is the outflow of investors from ETFs. Thus, over the past week, metal stocks at the SPDR Gold Shares (GLD) trust decreased by 11.0 tons, demonstrating negative dynamics for the tenth consecutive week, while net capital outflow in August was recorded at 456.0M dollars. Data from trading floors also confirm these changes in investment demand: according to the latest report from the US Commodity Futures Trading Commission (CFTC), last week, the number of net speculative positions in gold decreased to 117.7K from 125.8K contracts. If you pay attention to the dynamics of trading, it is "bulls" that close more deals, which can serve as short-term support for quotes: last week, swap dealers liquidated sell positions by 5,296K, and buyers increased by 1,755K contracts.

On the daily chart of the asset, the price is moving within a downward channel and, after reaching the low of the year, is preparing for a local reversal.

Technical indicators maintain a sell signal, ignoring a possible local correction: fast EMAs on the Alligator indicator are kept well below the signal line, and the AO oscillator histogram is decreasing in the sell zone.

Resistance levels: 1727.0, 1802.0. | Support levels: 1696.0, 1640.0.

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