The price of gold saw significant swings in July 2019, as market participants and investors navigated a rapidly changing economic landscape. The precious metal opened the week at Rs 35,180 per 10 grams in India, but demand plummeted as the US dollar recovered to a one-week high and market experts speculated over the US Federal Reserve’s monetary policy review.
The average price for gold in July 2019 was 1.415,87 USD an ounce. The lowest was 1.382,70 USD an ounce while the highest was 1.446,63 USD an ounce. Average gold price in 2019 was $1,393.34.
Precious metals, including gold, have seen a boost in prices as the expectations of an interest rate cut by the Federal Reserve and escalating trade tensions between the U.S. and China rise. The World Bank’s Precious Metals Price Index is expected to rise 2.6% this year, with gold leading the way. After reaching a low in August 2018, gold prices rose to $1,340 per troy ounce in early June 2019, marking the second highest level in over a year.
This increase in gold prices is due to several factors, including:
- Accommodative monetary policy. The probability of the Federal Reserve cutting interest rates by the end of the year has risen to 98% in June, up from 50% a month earlier, due to weak U.S. economic data.
- Strong central bank demand. In Q1 2019, central bank demand for gold, particularly from China, India, Turkey, and Russia, increased by 68% year-over-year. The four-quarter cumulative gold buying by central banks is at a record high.
These factors are contributing to the projected 3.2% increase in gold prices for 2019, as reported by the latest Commodity Markets Outlook. However, the demand for gold picked up once again as the US-Sino trade negotiations increased the demand for safe-haven assets. Gold prices surged to Rs 35,010 per 10 grams on 24 July 2019, although gains were capped by the well-performing US dollar. The yellow metal prices then rose by Rs 20 to Rs 35,030 per 10 grams on 25 July 2019 before dropping to Rs 34,990 per 10 grams the next day.
The decline in prices was attributed to the well-performing US dollar index, which gained against a basket of other major currencies. The precious metal consolidated its gains towards the end of the week following the release of the US employment data and held steady at Rs 34,980 per 10 grams for the rest of the week.
Market participants and investors remain cautious as they navigate the uncertain economic climate. The fluctuations in gold prices reflect this uncertainty, as investors seek a safe haven for their assets in the face of rising tensions in the Middle East and poorly performing financial markets.
Despite the fluctuations, gold continues to be a popular investment option for those seeking to protect their wealth. As the global economy continues to evolve, the demand for gold is likely to remain strong, with market participants and investors keeping a close eye on the precious metal’s performance.