Gold prices dipped this week ahead of the FOMC meeting on Wednesday falling to the 2,317 level. The XAU/USD chart decreased by 17.50 points dipping 0.75% in the 24-hour day trade. The gold price run came to a halt as the US equity markets gained steam. The S&P 500 index reached 5,116 points on Monday’s closing bell while the Dow Jones Industrial Average hit 38,386. Additionally, the Nasdaq Composite is looking to breach the 16,000 level next as it ended Monday’s trade at 15,983.
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Billionaire investor David Einhorn explained why gold prices are receiving heavy demand from the East making its price surge. The demand for gold in the West has reduced but gained steam in the East by Central Banks, institutional funds, and retail investors.
Analyst Explains Why the East is Receiving Gold Demand & Not the West
Billionaire investor David Einhorn revealed that Central Banks in the East have been accumulating gold since 2022. China’s gold trading volume has surged more than 400% this year alone making it the largest buyer of the precious metal. “Perhaps the West is running out of gold it is willing to sell, while Eastern demand has remained strong enough to force the price higher,” said Einhorn.
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Central Banks in the East have procured more than 1,000 tonnes of gold in the last 18 months. “While it’s possible the advance was related to the market beginning to doubt the sustainability and wisdom of both monetary and fiscal policies, other indicia suggest that this was not the case,” said the billionaire.
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Apart from China, Central Banks in the East including India and Japan have been accumulating the precious metal. Developing countries like Brazil, Russia, Saudi Arabia, and South Africa have also followed the gold-purchasing mania. Read here to know a realistic price prediction on high gold that could trade by the end of 2024.