Gold hits 3-month high as Fed rate outlook shifts; India demand picks up

Gold prices have surged to a three-month high, following a shift in Federal Reserve outlook and increased demand in India. The precious metal has traded above $4,630 per ounce, marking its highest level since mid-May and a 16% rise from last month's range of $3,900-$4,000. This bullish trend is driven by a weaker dollar, reduced expectations of a US Federal Reserve rate hike, and Treasury measures to manage its debt, which have boosted demand for alternative assets like gold.

In India, the precious metal is now trading at around Rs 1.6 lakh per 10 grams on the Multi Commodity Exchange, with demand picking up as the festive season approaches. The rally follows the Treasury's announcement to double buybacks of its longer-term bonds, maintaining yields amid high US government debt levels. Lower yields make gold more appealing as it lowers the opportunity cost of holding a non-yield-bearing asset, further bolstering its value as a safe-haven investment.

Experts believe that the positive outlook for gold may continue, with prices potentially reaching $4,900-$5,000 levels. However, the outlook remains uncertain due to factors such as the outcome of the war and other variables. Market participants are also eagerly awaiting Fed Chair Kevin Warsh's speech at the Jackson Hole symposium, which could provide insights into the central bank's interest rate trajectory.