Rhona O'Connell - head of market analysis at StoneX Bullion, said that India's tax cuts on gold and silver and China's rising physical demand will boost gold prices.
O'Connell noted that gold prices have been volatile due to last week's US economic data, especially as expectations of a September interest rate cut strengthened.
“In the physical gold market, there are clear signs of a resurgence in demand for the precious metal. First, the Indian Government reduced import tax on gold and silver from 15% to 6% in the middle of last week. Initially, the move led to some sell-off. However, the sale did not last long."
Besides, gold ETF inflows also remained at a positive level, recording 16 tons of net inflows in just 4 days last week.
Not only India and China, Western investment demand is gradually reappearing in the gold market when the US Federal Reserve (FED) prepares to loosen interest rates (as early as September). .
In a recent interview with Kitco News, Ryan McIntyre, managing partner at Sprott Inc., said the gold market could see a significant rally as demand for exchange-traded funds begins to increase.
McIntyre's comments come as gold prices are facing resistance at $2,400 an ounce, just weeks after hitting an all-time high of $2,480 an ounce.
McIntyre said that although the Fed's upcoming interest rate cuts make gold attractive, there is no real incentive for investors to get into the market right now.
“The environment for gold is improving, but I don't think the institutions have a strong buying signal. That won't happen until there's more risk aversion in the market," he said.
The expert added that it would take "a significant shift" for investors to change their thinking about how to build their portfolios. McIntyre said he expects investment sentiment to change significantly as the slowing economy begins to affect the stock market.
He added that the only factor that continues to support the USD as the world's reserve currency is the lack of other alternatives.
