Precious Metals Preview: COMEX Gold Rebounds To Approach Near $1700 Per Ounce

7 Nov 2022 , 12:17 AM

Gold came off a one year low last week before jumping sharply to approach near $1700 per ounce mark. The prices fell after the US Federal Reserve announced its widely expected decision to raise interest rates by another 75 basis points. Citing efforts to achieve maximum employment and inflation at the rate of 2 percent over the longer run, the Fed announced its decision to raise the target range for the federal funds rate to 3.75 to 4 percent. The Fed also said that ongoing increases in rates will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. However, the central bank noted that future rate hikes will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. The Fed also said it will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in the Plans for Reducing the Size of the Federal Reserves Balance Sheet that were issued in May. The World Gold Council or WGC stated in a latest update that a 17% y-o-y increase in Indian jewellery demand – to 146t – was led by strong demand in the South in third quarter of 2022. The overall Q3 demand was 12% above its five-year quarterly average (131t) and took y-t-d demand to 381t, 10% higher than last year and almost equivalent to 2019 pre-COVID levels. Urban India consumers have driven the recovery in gold jewellery demand, as economic activity in these areas has normalised. Credit expansion has added impetus to this demand, with bank loan growth touching a nine-year high by quarter-end. The WGC said that it is positive in its outlook for the rest of the year, as festival and wedding demand should be supportive.Powered by Commodity Insights