Global Gold prices fell 2% in October on continued rising bond yields and dollar strength. However, the yellow metal was positively impacted by higher breakeven inflation and slowing ETF outflows, according to World Gold Council (WGC).
In India, however, Gold demand remained strong in October due to the onset of the festival and wedding season. Domestic Gold prices ended the month of October only 0.7% lower supported by a depreciating rupee and festival demand.
As per WGC, Dussehra and Dhanteras festivals sparked fresh physical Gold demand during in October.
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“With the festival of Dhanteras celebrated on two days this year (22 and 23 October) and stable gold price, both jewellery (weddings and normal) and bar and coin purchases were boosted. With demand strong, the local market jumped into a premium of US$3/oz by end of October; higher than the small discount of US$0.5-1/oz seen at the end of September,” WGC said in its monthly Gold Market Commentary.
What to expect in November
Gold has entered November expecting the Fed’s fourth consecutive 75 basis point hike, as the latest data from the US economy shows that consumer spending, job openings, wage growth, and inflation expectations haven’t cooled off as much as the Fed would like.
“Monetary policy tightening for the next couple of months, with markets expecting the Fed terminal rate to be 4.75-5%, would thus keep the pressure on gold prices, capping the upside,” write Chirag Mehta, CIO and Ghazal Jain, Fund Manager of Quantum AMC in their “Gold Outlook – November 2022” report.
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Experts say that current Gold prices may be a good entry point for investors.
“Given that gold registered a seventh consecutive monthly decline in October, current prices can be a good entry point for gold investors to capitalize on the upside in prices from the recession, risk aversion, and end-to-rate hikes that are to eventually follow,” Mehta and Jain said.
“Indicative of the prevailing global uncertainty and need for diversification, global central banks bought a record 399 tons of gold ($20bn) last quarter taking full-year purchases to 673 tons, the highest since 1967. Investors too should acknowledge the risks in the current economic environment and diversify their portfolios with a gold allocation,” they added.
Earlier last month, Motilal Oswal said also said in a report that it may be a good time to invest in Gold for a better upside in near future.
