The world’s best-performing commodity this year may be about to lose its monkey magic.
Gold, after posting its biggest rally to start a year since 1980, will drop this month as Chinese consumers slow purchases that surged before the start of the Lunar New Year, according to eight of 12 analysts surveyed by Bloomberg.
Prices that touched a seven-month high of $1,200.97 an ounce on Monday may drop to $1,100, based on average estimates from seven analysts providing forecasts. After three straight annual declines, gold surged in 2016 as investors sought a haven from slumping equities and weaker economies, while Chinese consumers purchased gifts before the Year of the Monkey began on Monday.
But seasonal buying in China, which accounts for more than a quarter of global demand for gold jewelry, usually drops off as shops close for at least a week of holidays, removing a source of price support. Over the past decade, gold’s biggest monthly gain on average was in January, with small advances in February and losses in March.
“The gold market needs physical buying, and we’re already seeing a slowdown of trade with China,” said Robin Bhar, a London-based analyst at Societe Generale SA who predicts prices may drop to $950 this year.
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