Gold demand in China, India set to improve in coming months
Odds of 25 bp rate US rate cut in Sept at 69.5% – CME FedWatch
Hezbollah launched hundreds of rockets and drones at Israel
By Anushree Ashish Mukherjee
Aug 26 – Gold prices firmed on Monday, nearing its recent record high, amid solid bets of a September interest-rate cut following dovish signals from Federal Reserve Chair Jerome Powell and safe-haven demand due to geopolitical risks in the Middle East.
Spot gold rose 0.3% to $2,518.47 per ounce at 01:45 p.m. ET , just shy of the record high of $2,531.60 hit last week. U.S. gold futures settled 0.3% higher at $2,555.20.
The dovish signals from Powell’s speech on Friday and safe-haven interest and geopolitical risks in the Middle East are precipitating the bid in gold this morning, said Peter A. Grant, Vice President and Senior Metals Strategist at Zaner Metals.
Hezbollah had launched hundreds of rockets and drones at Israel early on Sunday.
“I’ve got a short term kind of Fibonacci objective at $2,539.77 and then my secondary is at $2,597.15,” Grant added. Powell on Friday endorsed an imminent start to rate cuts, saying further cooling in the job market would be unwelcome. Traders have fully priced in a cut for next month, with a 69.5% chance of a 25-basis-point reduction and a 30.5% chance of a 50 bp cut, according to the CME FedWatch tool. Bullion, traditionally seen as a hedge against geopolitical risks, tends to thrive in a low-interest-rate environment.
“There might be some indication that China is going to come back in, but even if they don’t, demand from central banks has been pretty robust regardless of price this year and that’s going to continue,” Grant said.
Gold demand in top consumers India and China is expected to improve in the next few months, industry officials said.
Spot silver rose 0.6% to $29.98, hitting a more than a month high.
“Industrial demand for silver looks relatively strong going into 2025, particularly as demand from solar photovoltaics looks to retain a good pace of growth,” analysts at Heraeus wrote in a note.
Platinum gained 0.1% to $963.80, while palladium held steady at $963.00.
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### Gold Demand Outlook in China and India
The anticipated improvement in gold demand in China and India in the coming months could be driven by various factors, including economic stability, cultural significance of gold, and potential price movements. Additionally, the ongoing geopolitical tensions and economic uncertainties may further boost the demand for gold as a safe-haven asset in these regions.
### Impact of Geopolitical Risks on Precious Metals
Hezbollah’s recent actions, launching rockets and drones at Israel, have escalated geopolitical uncertainties in the Middle East, contributing to the rise in gold prices. Such heightened tensions often lead investors to seek refuge in precious metals like gold and silver, reinforcing their status as traditional safe-haven assets.
### Silver and Platinum Market Dynamics
The positive performance of spot silver, reaching a more than a month high, reflects the strong industrial demand for the metal, particularly driven by the growth in solar photovoltaics. Similarly, the stable prices of platinum and palladium indicate steady market conditions and potential opportunities for investors looking into these precious metals.
