Gold fell further from last week's record high, as traders unwound positions on signs the metal's explosive rally may have run too hard and too fast.

Bullion dipped 0.4% to near $3,305 an ounce in early Asian trading, and is down more than 5% since peaking above $3,500 on Wednesday. Shifts in options positioning — which last week saw trading volumes on the SPDR Gold Shares ETF surpass a record 1.3 million contracts — could point to an overheated market in the short term as prices run ahead of fundamental drivers including the dollar and real rates, according to Barclays Plc.

"We think that gold is going to come down," Barclays' Stefano Pascale said in an interview. "Technicals are starting to be a little bit stretched."

Meanwhile, hedge fund managers cut their net long futures and options positions on the metal to the lowest level in 14 months, the latest Commodity Futures Trading Commission data show. 

Still, the precious metal is up more than 25% this year — outperforming nearly ever other major asset class this month — as US President Donald Trump's aggressive trade policy and fears about the global economy spurs demand for haven assets. The gains have also been supported by inflows into bullion-backed exchange-traded funds, as well as central-bank buying, as well as signs of strong demand in China, including from retail investors.

Investors were also closely watching for more developments on the global trade front, after Trump on Friday suggested another delay to his higher "reciprocal" tariffs was unlikely. The president also said that he would not drop tariffs on China unless Beijing offers "something substantial" in return. 

Last week, Bloomberg reported that China is considering the suspension of its 125% tariff on some US imports, people familiar with the matter said. Meanwhile, officials in the second-biggest economy plan to hold a press conference later Monday about measures to stabilize employment and ensure stable growth.

Gold for immediate delivery fell 1.1% to $3,281.60 an ounce at 10:15 a.m. in Singapore, after declining 0.2% last week. The Bloomberg Dollar Spot Index was up 0.1%. Silver and palladium fell, while platinum was little changed.

Source : Bloomberg