Theme: Commodities | Why are central banks driving record gold purchases and what does it mean for the market?

In this State of the Economy podcast, Dr. Renisha Chainani - Research Head Of Augmont - Gold For All and businessline’s Subramani Ra Mancombu discuss the volatility in the gold market.  Gold prices peaked at $2,450 before dropping over 5 per cent, influenced by geopolitical tensions, currency movements, and anticipated US Federal Reserve rate cuts.  Chainani predicts that gold prices will likely reach new highs in late 2024 despite short-term corrections due to robust demand and economic uncertainties like the US elections. Central banks, particularly in emerging markets, have significantly driven gold demand, accumulating over 400 tons from January to May 2024. While China paused its gold purchases in May due to high prices, other central banks continued their acquisitions, indicating a long-term trend of de-dollarisation and diversification into gold.  India, a major gold importer, brought in 260 tons of gold from January to May 2024, surpassing the previous year's figures. The surge in gold imports is attributed to rising inflation, economic uncertainties, and increased investment demand. Chainani says she has seen a shift towards digital gold purchases post-COVID, driven by the younger generation's preference for online shopping. Digital gold offers secure storage, ease of transactions, and low entry costs, although it lacks a regulatory framework. The festive season from August to December is expected to boost gold demand significantly, supported by rising incomes and hybrid shopping models that combine online browsing with offline purchases.   Listen to the podcast now.   (Host: Subramani Ra Mancombu, Producer: Anjana PV)