Gold has pulled back after two consecutive days of advances on Tuesday, although it remains on a bullish trend driven by expectations of interest rate cuts in the US.
The chances of rate cuts starting this year have increased slightly due to recent cooling inflation figures, leading to anticipation of a rate cut in September.
The yellow metal also benefited from heightened geopolitical tensions, acting as a safe haven asset. On the demand side, strong demand continues to support gold prices, notably with central bank purchases and robust activities in Asia, particularly from China. Furthermore, India, the world’s second-largest gold consumer, has also seen solid demand.
The Reserve Bank of India (RBI) has also added 25 tonnes to its reserves since the start of the year, reaching a total of 828.6 tonnes.
However, Indian gold ETFs reported net outflows in April. Despite these outflows, total assets under management rose 5% month-on-month and 43% year-on-year. Attention is now turning to the Federal Reserve, with the market anticipating the minutes from the Fed’s last policy meeting on Wednesday, which may provide insights into the monetary policy outlook.
This week also features several speeches from Fed officials, who recently emphasized the need for more time to assess whether inflation is adequately slowing towards the target and if the current restrictive policies are effective.
