Gold prices will not rise significantly any time soon, as India demand drops – WGC
ALBWABA – The unexpected decline in US inflation rates, reported Wednesday, is weighing down on gold prices, as well as demand in the world's second-largest gold consumer market, India, for the second month in a row, according to the World Gold Council (WGC).
Meanwhile, gold settled at a 0.24 percent decline by the end of business day on Wednesday, after the U.S. Consumer Price Index (CPI) report showed inflation has actually declined in April.
Demand expectedly dropped in March as buyers held their breath for the Federal Reserve Board (Fed)'s decision on further interest rate hikes and their impact on inflation.
Gold demand in India fell 17 percent in March, to the lowest level in more than two years, Investing.com reported.
The global investment platform predicts that demand for gold will remain low due to the high prices.
Earlier in May, the Fed announced that there will be no more rate hikes until the board reconvenes in June.
The central bank of America, i.e. the Fed, explained that they will wait to observe the impact of the rate hikes on inflation before making their decision.
With inflation slowing down in April, experts and buyers alike believe the federal board will not raise interest rates in June.
More so, Investing.com stated that they expect the Fed to start cutting rates later in the year.
Meanwhile, as the Indian gold market remains unhinged in the face of financial uncertainty in the U.S., it is unlikely that gold prices will see a significant rise any time soon, WGC predicted.
Low demand in India will continue "for the next two quarters", said Som Somasundaram, the regional chief executive officer of WGC's India operations, as reported by Reuters.
