Fed and India pricing in gold

The inflationary emphasis coming from the Fed in gold created pressure on pricing on the first trading day of the new week. Signals coming from India are also being monitored in the market along with the Fed. The World Gold Council stated that the record high prices in India, the second largest consumer, caused local buyers to wait and reduce demand. Gold entered the new week with a decline following the latest comments from Fed officials. While spot gold tested 1966 gold per ounce, gram gold saw 1206 TL. Gold had finished last week down 0.6 percent after rising almost 10 percent compared to the previous three weeks. While the banking crisis has reduced expectations that the Fed will hike interest rates further, swap investors have begun pricing in multiple interest rate cuts this year. Low interest rates generally have a positive effect on the price of the precious metal. Minneapolis Fed President Neel Kashkari said over the weekend that the turmoil in the banking sector has increased the risk of a recession in the US, but that it is too early to assess what this means for the economy and monetary policy. Kashkari’s comments were interpreted more cautiously than Fed officials who said Friday that inflation remained a top priority and that further tightening was likely to be necessary. The World Gold Council noted that gold prices in India had hit an all-time high, deterring local buyers ahead of the Diwali festival next month, which is normally a major demand period. Gold futures in India, the world’s second-largest consumer, hit a record high last week at $734 per 10 grams. The country imports almost all of its gold, mostly from Switzerland and the United Arab Emirates. Data showing the Fed’s preferred measure of the underlying causes of price pressures is due on Friday and is expected to show that inflation remains well above the Fed’s target.