The gold market was bullish on May 8, 2023, as the price of the precious metal rose in various markets around the world. The main factors that supported the rise of gold were the weak US dollar, the rising inflation expectations, and the geopolitical tensions in the Middle East and Asia.
According to Kitco News, the Comex gold futures contract for June delivery settled at $2,123.40 an ounce, up $32.60 or 1.6% from the previous session. The spot gold price was also up by 1.5% at $2,118.50 an ounce. The analysts at Kitco News attributed the rally of gold to the weakening of the US dollar index, which fell to a three-year low of 88.65 on May 8. The US dollar index measures the strength of the greenback against a basket of six major currencies.
Another factor that boosted the demand for gold was the rising inflation expectations, as the US consumer price index (CPI) for April showed a 4.2% year-on-year increase, the highest since September 2008. The core CPI, which excludes food and energy prices, also rose by 3% year-on-year, the highest since January 1996. The higher inflation figures raised concerns that the US Federal Reserve might tighten its monetary policy sooner than expected, which could hurt the economic recovery from the pandemic.
The geopolitical tensions in the Middle East and Asia also supported the safe-haven appeal of gold, as violence escalated between Israel and Palestine, and China and Taiwan. According to Reuters, Israel launched air strikes on Gaza on May 8, killing at least 20 people, including nine children. Hamas, the Islamist group that rules Gaza, fired rockets at Israel in response, injuring several people. Meanwhile, China sent more than two dozen warplanes into Taiwan’s air defense identification zone on May 8, according to Taiwan’s defense ministry. The move was seen as a show of force by Beijing amid rising tensions over Taiwan’s sovereignty.
The gold market also witnessed an increase in demand from various countries on May 8. According to MSN, ten grams of 22-carat gold in Delhi cost Rs 56,750 and ten grams of 24-carat gold in Mumbai cost Rs 61,750 on May 8. The prices were higher than the previous day by Rs 150 and Rs 200 respectively. According to Daily Pakistan, the price of per tola gold increased by Rs1,400 to close at Rs226,900 while the price of 10 grams of 24 carats gold went down by Rs1,200 to settle at Rs194,530 in Pakistan on May 8.
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