As geopolitical tensions in the Middle East ease, crude oil prices experience a dip while gold prices surge, driven by safe-haven demand and robust buying from Chinese markets.
In April 2024, Brent Crude Oil prices hovered around USD 89.4 per barrel, experiencing a slight ease due to concerns over global demand and a stronger dollar index.
Despite a 16 per cent year-to-date increase attributed to the Middle East crisis, several factors contributed to the temporary dip in oil prices.
Economic slowdown in China and diminishing hopes for US interest rate cuts weighed on global oil demand. A strengthening dollar index exerted downward pressure on oil prices. Surplus in US crude oil inventories surpassed expectations, further pressuring prices down.
Concerns over the Israel-Iran conflict have slightly eased, alleviating supply fears.
However, hopes for Chinese demand and ongoing tensions between Israel and Iran, coupled with OPEC’s unchanged supply policy until the second half of 2024, have provided some support at lower price levels.
Meanwhile, gold prices surged to USD 2,338 per t oz in April 2024, reflecting a broader trend of 20 per cent growth over the past year. Domestically, the price of gold reached Rs 65,540 per 10 grams for 22-karat gold and Rs 71,500 per 10 grams for 24-karat gold.
Global gold demand witnessed a 3 per cent year-on-year increase in the first quarter of 2024, totaling 1,238 tonnes, marking the strongest first quarter since 2016. Notably, central banks added 290 tonnes to their official holdings during the quarter, while bar and coin investment remained steady at 312 tonnes.
Jewellery demand for gold in Asia countered decreases in Europe and North America, and demand for gold in technology recovered 10 per cent year-on-year, driven by the AI boom in the electronics sector.
On the supply side, mine production increased 4 per cent year-on-year to 893 tonnes, a record first quarter, while recycling jumped 12 per cent year-on-year to 351 tonnes as some investors saw the high price as an opportunity to take profits.
Gold, historically considered a safe-haven asset, retains or appreciates its value during times of turbulence. In the first quarter of 2024, gold investment demand in Eastern markets, particularly in China and India, grew considerably as the gold price surged.
In India, demand for gold during the first quarter of 2024 reached 136.6 tonnes, marking an 8 per cent increase compared to the same period in 2023. (ANI)
