As it is approaching the third anniversary of the Russia-Ukraine conflict, US and Russian delegations began talks in the Saudi Arabian capital, Riyadh, while setting up a negotiating team to resolve the Ukrainian conflict. Trump’s plan is to have a ceasefire between Russia and Ukraine on Easter, 20 April.
Meanwhile, according to the minutes of the Federal Reserve’s January monetary policy meeting released on Wednesday (19 February), the Fed hints it may not cut rates again this year after announcing in January that it would keep current interest rates unchanged due to high inflation and Trump has yet to finalise important economic policies. Policymakers believe the central bank needs to see whether inflation will fall to its 2% target or reignite the uptrend.
Spot gold prices were down 0.28 per cent at $2,927.08 per ounce by today’s close.
After the news of the U.S.-Russia talks, gold prices which rose for seven weeks and hit new record highs recently fell for the first time. Morgan Stanley analysts expect, by the end of this year, the gold price will fall back to $2700 per ounce, if Russia and Ukraine to reach a potential peace agreement, the price of gold may even fall to $2400, which is the price of 12 months ago.
And the latest data released by the World Gold Council last week showed that global central bank purchases in the fourth quarter of last year were stronger than expected, reaching 333 tonnes. (up 54% year-on-year) WGC said 2024 is the third consecutive year of gold purchases by central banks of more than 1,000 tonnes, roughly double the average rate of purchases before the Russia-Ukraine conflict.
The World Gold Council noted that the Chinese gold market is improving in January, boosting gold bulls’ confidence, including seasonal inventory replenishment by jewellery retailers, banks and other market participants ahead of the Lunar New Year holiday (China’s traditional peak gold-consumption season); a third consecutive month of rising gold holdings by China’s central bank; and the New Year holiday in late January-early February, which showed signs of a recovery in consumption as well as record-high sentiments towards gold.
These positive trends are likely to continue, says Ray Jia, head of research for China at the World Gold Council (WGC). This, coupled with China’s recently announced policy change to allow ten Chinese insurance companies to purchase up to 1 per cent of their total assets in physical gold as a pilot, should provide long-term support for local investment gold demand.
