Barring a grandiose geopolitical regime change, it is likely that Chinese demand will subside towards normal levels. This would leave Gold prices vulnerable to a steep consolidation lower, in the view of strategists at TD Securities.

Massive Chinese buying is unsustainable

“Chinese demand appears unrelenting for the time being, but barring a grandiose geopolitical regime change, we find that it would likely subside towards normal levels in coming months. This would leave Gold prices vulnerable to a steep consolidation lower, given Gold's lack of alternative buyers and its current mispricing relative to its recent historical relationship with real rates.”

“We turn to our tracking of positioning for the top ten Gold traders in China to scour for nascent signs of peaking Chinese demand, which could present a tactical signal for a noteworthy repricing lower.”