Gold is holding on to its monthly high at the start of the week. The metal is up ~9% YTD. A few catalysts could support gold prices going forward:

1) A no hike / reduced pace decision from Fed could support gold prices.
Fed’s dovish comments and weak economic data (April retail sales, inflation) have been supporting gold prices by reducing the prospects of multiple rate hikes this year. Upcoming data during this week on the labor market, inflation could further influence Fed’s June decision and impact prices

2) Geopolitical concerns remain. A black swan event could support prices
While Macron’s win in French elections relieved the markets, multiple risks like US-North Korea tensions, UK elections, etc. still exist. A black swan event could increase gold’s safe-haven appeal

3) Demand from Indian and China could gain momentum this year
These countries contribute to ~50% of the global gold demand. India’s gold demand suffered last year from demonetization.But the uncertainty surrounding demonetization has been receding and this could prop demand. China demand also took a hit last year as the Govt. restricted gold imports to support a weak Yuan. Lifting/easing of these restrictions could mean an upside for gold.

4) The Trump factor – his policies and ongoing political battles could bode well for gold
Trump’s leanings towards a soft dollar to support trade could mean a potential upside for gold. Further, tangible findings from FBI investigations on his Russia dealings could deflate the overpriced equity markets and send gold prices soaring

 

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