The precious metal is in demand as Narendra Modi becomes the new Prime Minister of India. Mr Modi has yet to select the next finance minister, but it is expected that whoever takes over the role will ease restrictions on importing gold. India is the second largest importer of the yellow metal, behind China.
The European Central Bank and three other European central banks have agreed not to sell ‘significant’ amounts of gold over the next five years. The new agreement will replace the deal which is set to expire in September this year.
On Wednesday, the Federal Reserve will release its minutes at 7pm (London time) and the focus will be on the language used by the US central bank. If the minutes have a similar dovish tone to the previous release, it could boost the metal to the 50-day moving average of $1308. If gold holds above the 200-DMA of $1294 the outlook will be more positive than negative.