Traders are looking ahead to tomorrow’s minutes from the US Federal Reserve, with speculation that its quantitative easing programme is to be cut back before the year is out. When Fed chairman Ben Bernanke suggested in May that tapering might begin in September, the equity market dropped significantly. If equity traders become nervous, we could see gold rally as it is deemed a lower-risk investment.
India is the largest importer of gold in the world, but some investors are worried its demand will drop as the Indian rupee has collapsed versus the US dollar. The rupee is near a record low which will make it more expensive for Indian investors to buy the metal. Analysts at HSBC believe that restrictions on gold imports at the Indian central bank may be removed, which could be push the boost local demand.