Gold Price Rebound Mainly Driven by Inflation, Interest Rates and Dollar

SEATTLE (Scrap Monster): The World Gold Council (WGC), in its latest released Gold Market Commentary, stated that gold prices rebounded 4.5% during the month of April this year, mainly driven by a combination of various factors including rising inflation concerns, softer interest rates and a weaker dollar.

According to WGC, gold made a turnaround from the first three months of the year, rebounding 4.5% in April to finish the month at US$1,768/oz. This is the highest monthly closing level since January. The strong performance during the month was echoed across several key currencies. Meantime, the yellow metal found resistance at US$1,800/oz during the month. Also, gold continues to remain 6% lower year-to-date.

ALSO READ:

Global Gold Supply Posted 4% Decline

China to Approve Quotas for Bulk Gold Imports into the Country

Going forward, gold markets remain nervously poised for the outcome of rising inflation and reactions of central banks across the world. It must be noted that central banks have continued to maintain their accommodative stance, despite rising inflation concerns. The direction of rates too will be an important driver of gold prices.

The rising Covid-19 cases across the world, especially in India, could also pose serious risks to the market. WGC cited that consumer demand in the country recorded substantial decline in April this year, mainly driven by pressure from surging Covid-19 cases and rising domestic gold price. The demand recovery seen in Q1 this year could slow.