Gold prices surged to a record high of $2,740.37 on October 22, 2024, driven by heightened geopolitical tensions and expectations of central banks lowering interest rates. This marks a year-to-date increase of over 32%, despite a stronger U.S. dollar and rising Treasury yields that typically exert downward pressure on gold prices.
Analysts attribute the ongoing demand for gold to uncertainty in the global market. According to market experts, sustained inflows into gold-backed exchange-traded funds (ETFs) have further bolstered gold's upward momentum. In September, these ETFs recorded their fifth consecutive month of inflows, amounting to $1.4 billion.
The BRICS summit has underscored the significance of gold as member nations, particularly Russia and China, look to diminish their dependence on the U.S. dollar. With Russia holding 8.1% of global gold reserves, speculation is growing that BRICS may consider a gold-backed currency to enhance economic independence.
In India, jewellers are bracing for muted demand during the Dhanteras festival, as gold prices hover around Rs 80,000 per 10 grams. Despite a reduction in customs duty, the high prices are expected to reduce sales volumes by 10-12% compared to last year. However, value sales may rise by 12-15% due to elevated prices.
Industry leaders predict that central bank and investment demand could offset the decline in consumer purchases. With over 40 lakh weddings anticipated post-Dhanteras, the industry expects sales to reach around 20-22 tonnes on the festival day, matching last year’s figures.
Overall, the intersection of global economic uncertainties and domestic festive demand is expected to shape the gold market in the coming weeks.