Two recent geopolitical events – the US missile strike on Syria and rising tensions in the Korean peninsula – seem to have given gold a fresh lease of life, with safe-haven buying pushing up prices of the yellow metal closer to $1,300 an ounce.
The upside move comes on top of two other supportive developments. The first is the emerging possibility that the Fed is unlikely to hike interest rates in June. Expectations of a 25 bp rate hike have begun to fade now, given that economic data, including the latest payrolls, do not seem to augur well for raising rates anytime soon.
The other factor is even more solid. Physical demand in two of the world’s largest importers and consumers – India and China – has been picking up in recent months. After the demonetisation-driven disruption, which stymied physical buying since November 2016, the Indian market seems to be back to near-normal.