Easing Tensions Boost Gold Demand Ahead of Festive Season

The recent easing of tensions between the US and Iran has led to a decrease in gold prices, creating an opportunity for buyers who had delayed purchases due to volatility. According to Colin Shah, Managing Director of Kama Jewelry, the de-escalation in geopolitical tensions has reduced the risk premium in gold prices.

The softer prices are expected to encourage consumers to return to the market ahead of the festive and wedding season, helping to clear inventories. Shah noted that while prices have cooled down, buyers remain vigilant and cautious due to recent volatility driven by geopolitical developments.

Manav Modi, Commodities Analyst at Motilal Oswal Financial Services, pointed out that gold prices remain supported by a weaker US dollar despite easing tensions. He also mentioned that investors are now focused on the US Federal Reserve's policy meeting later this week, where markets will closely watch the central bank's commentary on the future rate path and inflation outlook.