Gold prices experienced a decline from recent highs on Tuesday, relinquishing gains from two consecutive days, albeit maintaining an overall bullish trajectory propelled by expectations of interest rate adjustments in the United States.
The likelihood of rate cuts commencing this year has seen a marginal uptick, primarily fueled by recent subdued inflation metrics, fostering anticipation of a rate decrease in September.
Geopolitical uncertainties have further underscored gold’s allure as a safe haven asset, sustaining its appeal amid market volatility. Concurrently, robust demand dynamics persist, buoying gold prices, notably fueled by central bank acquisitions and robust activity in Asian markets, particularly in China. Moreover, India, the globe’s second-largest gold consumer, continues to exhibit steadfast demand.
The Reserve Bank of India (RBI) has bolstered its reserves by 25 tonnes since the year’s inception, amassing a total of 828.6 tonnes.
In contrast, Indian gold Exchange-Traded Funds (ETFs) witnessed net outflows in April. Despite this trend, total assets under management surged by 5% on a month-on-month basis and soared by 43% year-on-year. Attention now pivots to the Federal Reserve, with market participants eagerly awaiting insights from the Fed’s recent policy meeting minutes scheduled for release on Wednesday, poised to offer clarity on the monetary policy trajectory.
This week also features a lineup of speeches from Fed officials, who have recently stressed the necessity for additional time to evaluate the pace of inflation moderation towards the target and the efficacy of prevailing restrictive measures.
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