Gold prices in India saw a slight uptick on Wednesday, June 4, with the price per gram rising to Rs 9,275.17 from Rs 9,256.11 on Tuesday. The price per tola also increased to Rs 108,183.80 from Rs 107,961.50. Several factors contributed to the rise in gold prices.
The US Dollar faced pressure due to declining US Treasury bond yields and expectations of Federal Reserve rate cuts, despite positive job openings data from the JOLTS report. Comments from Federal Reserve officials, including Atlanta Fed President Raphael Bostic, Chicago Fed President Austan Goolsbee, and Fed Board of Governors member Lisa Cook, expressed caution over economic policies affecting inflation and economic activity. Trade-related uncertainties, stemming from an expected call between US President Donald Trump and Chinese President Xi Jinping, along with increased tariffs on steel and aluminum, also favored the safe-haven appeal of gold.
Gold has historically served as a store of value and a hedge against inflation and currency depreciation. Central banks are major gold holders, with notable buyers including China, India, and Turkey.
Factors influencing gold price trends
In 2022, central banks added a record 1,136 tonnes of gold, valued at around $70 billion. Gold typically has an inverse relationship with the US Dollar and US Treasuries. Lower interest rates generally boost gold prices, while higher rates can weigh them down.
Geopolitical instability, fear of recessions, and the behavior of the US Dollar also influence gold prices. As of June 4, the price of 10 grams of 24 carat gold in major Indian cities ranged from Rs 99,170 to Rs 99,320, while 22 carat gold prices ranged from Rs 90,900 to Rs 91,050. COMEX gold futures fell 0.6% on the previous day, settling below $3,380 per ounce due to a rebound in the US dollar.
However, ongoing trade tensions between the US and key partners such as China and the EU could provide underlying support for gold prices. Investors are advised to consider their risk tolerance and investment goals when deciding on the appropriate allocation for gold in their portfolios. Consulting with certified experts is recommended for any investment decisions.