Trading opened for the month with gold price in India plunging to Rs 34,810 per 10 grams on 01 August 2019 as weak global cues led to a substantial decline in demand.
The US Federal Reserve had slashed the interest rate by 25 basis points in its two-day monetary policy meeting on Wednesday. However, demand for the metal inched down as the Fed chief Jerome Powell’s speech tampered market expectations of a lengthy easing cycle.
Despite the bullion trade being pressurised by the gaining US dollar index, gold rates were expected to recover over the next few days on account of the geopolitical tensions prevailing in the Middle East, the US-Sino trade discussions and the global slowdown.
Thanks to a keen investor interest compounded by favourable market trends, demand for the metal recovered globally. Gold prices in India rose by over Rs 60, and the bullion was recorded trading at Rs.35,410 per 10 gram on 02 August 2019.
Demand for safe-haven assets surged globally with the US dollar losing its sheen on the weaker-than-expected US employment data and the futile US-Sino trade talks.
According to reports, gold picked up by over 2% during the week after the US President had threated to impose an additional 10% tariff on Chinese imports.
The week came to an end with the gold rate in India finishing at Rs.35,870 per 10 grams on 04 August 2019 amid the escalating trade tension and weaker US dollar index.
With markets focussed on the intensifying US-Sino trade war, demand for safe-haven assets such as gold can be expected to rise over the next few days.
Soon after President Trump announced his decision to impose extra tariffs on Chinese imports, China has reportedly confirmed its stance to retaliate.
If the trade relations deteriorate further, the US Central Bank may be forced to slash their interest rates again. It was only a few days back that the Fed Reserve had cut their interest rates to safeguard the nation’s economy against trade crises.