Gold prices continued to slide to a certain extent for the second month in a row, falling from a peak for this year while prices could remain under pressure. However, they stayed near the high end of the range for the last couple of months following some volatility in other financial markets and some uncertainty in expectations around inflation, monetary policy and economic conditions.

While central bank gold purchases could continue to provide some support to the asset over the longer term, slowing growth in general and difficult economic conditions in certain regions could also affect traders’ approach toward gold. However, Chinese residents’ purchases of the commodity could slow down as the Chinese economic recovery continues to be weaker than expected. At the same time, hopes of an economic stimulus in the country could continue to add to the uncertainty around the support for gold from Chinese consumers.

However, the hawkish stance of major central banks could continue to weigh on non-interest-bearing assets like gold and silver. While the Federal Reserve has effectively paused its rate hikes as expected, it raised its peak rate expectations and could raise its rates during the remainder of the year. The European Central Bank is expected to continue raising rates in its following meetings. The Bank of England followed in the same direction with a more aggressive hike after inflation came up higher than expected. In this regard, metals could see investors moving toward risk-free assets which are offering increasingly higher yields.