Gold prices continued to show weakness following the US debt ceiling deal and no escalation in regional bank problems.
XAUUSD: Weekly Chart
The price of XAUUSD has slumped to the $1,922 level and should test the $1,900 level this week.
Gold has continued to lose investor appetite after the United States government resolved the debt ceiling issue. Inflation levels have also continued to fall among developed economies, and that is also weighing on investor sentiment for precious metals.
However, lower prices have boosted the outlook for jewellers in India. April and May saw slowing demand with higher prices, but customers have been returning to the market, said industry executives.
“The wedding season in South India, the largest consumer of gold in the country, begins on July 15 and continues till August 10, and all jewellers are witnessing robust footfall as prices have fallen,” said jeweller Joy Alukkas.
There was a firming of gold prices on Monday after the US dollar remained weak. Concerns about the political situation in Russia have also been driving some investors back to gold.
“We are seeing some modest safe-haven demand in gold on the Russian incursion that was quickly aborted over the weekend. But there are still some underlying worries,” Jim Wyckoff, a senior analyst at Kitco, told Reuters.
“The marketplace wonders what’s going to happen next because the Russian military appears to be destabilising.” Putin appears to see his power weakening, and that has major implications around the world.”
Recent bullish comments from the Federal Reserve have hinted at further interest rate hikes in the US, while stubborn inflation in the United Kingdom led to a 50 basis point rate hike from the Bank of England last week.