Gold had set a high of US$ 2080 in the last two months, and in the last one month it has been struggling to break through the US$ 2060 level. The price is reluctant to come down and has made a
base around 2020 levels. It is remaining in a narrow range mainly due to the lack of fresh triggers to bring in some buoyancy. The direction of US policy is the main factor that it is waiting for. The Fed has indicated that they are still in an inflation fighting mode and that they would like to see more consistency in the data on inflation. The economic data released recently also point towards a
near-robust economy though there is some weakness in certain sectors. But this is going to get resolved as Fed gets into an easing mode by Q2 or Q3 of CY 24. That means the wait may not be too far
in time. The pick up in gold prices will start with the beginning of the rate cut cycle, and with dollar gradually losing ground against other currency majors.
Gold price is high as gold demand is robust. The demand for gold in 2023, for the full year, was to the tune of 4,899 tonnes, the highest levels in recent history. One of the major contributors to gold demand was the central bank buying, to the tune of 1,037 tonnes, the same level as it was in 2022. However, gold ETFs faced outflows for a third year in a row, and the outflows totalled 244 tonnes. The most amazing aspect of gold demand was the demand for jewellery, which stood firmly at 2093 tonnes despite the high prices. The demand for gold in electronics and technology, and the investments into gold bars and coins displayed a decline. Technically, there is good support at US$ 2010, and at US$1960 thereafter. Demand is expected to remain robust through the current year.
