Slight rise in gold prices amid increasing demand for the yellow metal!

Gold prices witnessed a slight increase in trading on Tuesday as they attempted to recover from losses in the previous session. This increase was supported by a rise in central banks' purchases of gold reserves over the past year, boosting demand for the yellow metal as a reserve asset.

Performance of Spot and Futures Gold Contracts:

Futures gold contracts rose by 0.34%, equivalent to about 9 dollars per ounce, trading at 2656 dollars per ounce. Meanwhile, spot gold contracts increased by 0.29%, equivalent to 8 dollars per ounce, bringing the price to 2644 dollars per ounce.

Factors Influencing Gold Price Increases:

The slight increase in gold prices can be attributed to several key factors, the most significant of which is the increased demand for gold, especially following reports indicating that China's gold reserves rose in December for the second consecutive month, reaching 73.29 million ounces by the end of the month, up from 72.96 million ounces in November.

Preliminary data also showed that central banks were net buyers of gold for the fifteenth consecutive year, reflecting the growing importance of gold as a reserve asset in the global financial system. This trend mirrors the ramifications of the economic and geopolitical fluctuations witnessed in 2024, continuing to support gold prices.

Additionally, gold prices benefited from a decrease in the US dollar index (which measures the performance of the US currency against about six major currencies) due to the inverse relationship between the two. A weaker dollar tends to support the prices of commodities priced in it, particularly gold, as it reduces the holding costs of gold. In this context, the dollar index fell by 0.26% to reach 107.99 points, contributing to supporting gold price levels.

Performance of Other Metals:

The gains were not limited to gold alone; other metals also saw notable increases. Silver rose by 0.63% to reach 30.777 dollars per ounce. Platinum contracts increased by 1.64% to 958.30 dollars per ounce, while palladium prices rose by 1.21% to 927.50 dollars per ounce.

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