Economists at Commerzbank analyze gold demand in China and India, the two largest gold consumer countries. They found that gold imports in both countries may dwindle in the coming months due to higher prices.
While gold is expected to remain stuck at current prices for the next three months, the German bank looks for the precious metal to end the year on a strong note. Commerzbank's analyst said that the July Fed rate hike is likely to be the central bank's last of this tightening cycle. This may lead to prices pushing back to $2,000 an ounce by the end of the year.
The premium on the global market price reached $19 per troy ounce on 14 July, bringing it closer to the six-year high of over $25 per troy ounce that it chalked up in September 2022. This could further slow gold demand in China, which is weaker in the summer months in any case.
China and India combined account for roughly half of physical Gold demand. The behaviour of gold buyers there, which tends to be anticyclical with respect to the price, thus has more of a stabilising than an amplifying effect on prices.
Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough & Polished
