Gold News – 06.Jan.2025
Gold News
Current Price & Market Outlook:
- Gold traded above $2,635 per ounce on Monday, as traders anticipated key U.S. economic data this week, including job openings, Fed minutes, and the non-farm payrolls report.
Fed Policy & Inflation Concerns:
- Remarks by Fed officials over the weekend suggested a cautious approach to interest rate cuts in 2025.
- Economic policies under the Trump administration could drive inflation higher, limiting the Fed’s ability to lower rates and reducing gold’s appeal as a non-yielding asset.
Geopolitical and Central Bank Activity:
- Central banks globally have doubled gold purchases since the Russia-Ukraine war, and ongoing geopolitical tensions support gold as a safe-haven asset.
Indian Gold Market Insights:
- India holds 25,000-30,000 tonnes of gold, valued at $2.5 trillion, which is 65% of its GDP.
- In 2024, Indian gold investors gained $375 billion (₹32 lakh crore) due to gold’s strong performance.
Gold’s Historical Performance:
- Gold (in INR) has matched Sensex returns over most timeframes with much lower volatility.
- In the last 20 years, gold had only 4 negative years compared to Sensex’s 2 significant negative years (-52% in 2008 and -25% in 2011).
Future Outlook:
- Gold may achieve 10-12% CAGR returns in INR terms over the next five years due to:
- Loose monetary and fiscal policies globally.
- Continued central bank purchases and diversification from USD treasuries.
- Potential trade wars and currency devaluation risks.
Investment Recommendations:
Best options include Gold ETFs, Gold Mutual Funds, or Sovereign Gold Bonds (SGBs). However, new SGBs are currently unavailable.
Author : Arman Shaban
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