Gold heads for first monthly gain in 5 months
What's the story
Gold prices fell slightly on Friday, but are still headed for their first monthly gain in five months. The rise is mainly due to geopolitical tensions in West Asia and a softer outlook for US interest rates, which have increased demand for safe-haven assets. Spot gold fell 0.2% to $4,096.29 per ounce while US gold futures for August delivery rose marginally by 0.1% to $4,094.1 per ounce.
Market performance
Best monthly performance since February
Despite the slight dip in trading on Friday, gold is set to gain over 2.2% in July. This will be its best monthly performance since February and its first monthly gain after four months of losses.
The US Federal Reserve's decision to keep interest rates unchanged at its latest policy meeting has contributed to this upward trend in gold prices.
External factors
Geopolitical tensions and economic factors boost gold prices
Geopolitical uncertainty, particularly a drone strike on gas vessels at Egypt's Mediterranean port of Damietta, has also supported bullion prices.
The incident has raised fears of an escalation in the US-Iran conflict and possible disruptions to shipping through the Suez Canal.
A stronger US dollar and easing inflation have been other key drivers for gold's performance in the market.
Demand trends
Global gold demand remained stable in April-June
The World Gold Council's report on global gold demand for April-June showed a stable figure of 1,268.9 tons. This stability was mainly due to stronger central bank purchases compensating for weaker investment demand.
However, India saw a 6% dip in gold consumption during the quarter due to high prices, increased customs duty, and subdued seasonal demand.