Gold may have benefited from inflation and geopolitical concerns in the last two days of the week. However, gold is a poor inflation hedge, and geopolitical tensions are yet to escalate to a disconcerting level that could support gold prices in a sustainable way.
Escalating tensions in Yemen have boosted gold’s allure going into the weekend and with short-dated US Treasury yields falling further, XAU/USD may have more room to run.
Indian gold prices surged to a fresh all-time high last year, with the most active MCX near-month futures booming to Rs 64,460 per ten grams in December. Firm overseas prices, weak Indian rupee, and expectations of an increase in jewellery demand amid peak wedding season propelled price rises.
Gold prices came under intense immediate downside pressure on better-than-expected US non-farm payroll data. However, weaker-than-estimated ISM services data turned the tide to catapult gold sharply higher as the US yields pummelled.
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