Gold can be bolstered by fresh jewellery demand


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Recovery from India and China’s markets

The demand for gold from India has risen by around 25% y/y on July and almost double from June’s levels as lockdowns start to ease to fight COVId-19. Any pent up demand could further realise as the peak season is still to come later this year.  

China imports bottom out 

Gold’s rally has been mainly driven by investment demand while retail demand has fallen due to lockdown restrictions. Gold backed etf’s have jumped to record highs. SPDR Gold Shares (GLD), the largest fund backed by physical gold in the world, has been the most popular gold ETF in the month of July attracting more than $3 billion in assets. These bids have helped gold which is up more than 36% year to date and about 40% since bottoming out in March. So, news that China’s gold imports are starting to recover is welcome music to gold bulls: 

Recovery from India and China's markets

Jewellery accounts for around half of all global demand despite recent declines. So consumer demand picking up again is further good news for investors. Taking a look at the seasonal demand for gold you can see that with the wedding season in August equates to strong seasonal demand for gold.  

Gold

Getting in to gold’s rally again if you have missed it or want to re-enter should involve waiting for some clear signal on the higher timeframe. As tempting as the push higher is a pullback will come and that is the thing to wait for now. Patience the name of the game as there should be many chunks of this bull run to take out along the way. So, don’t get impatient and just hit that ‘buy’ button. Patience will pay you here.