Gold and silver prices rose today in the Indian markets, following the positive trend of world rates. On MCX, October gold futures rose 0.1% to ₹51504 for 10 grams to extend the gains to the second day. September Silver Futures on MCX rose 0.4% to ₹69,135 per kg. In the previous session the gold had risen ₹500 for 10 grams, while silver had gained roughly ₹1,000 per kg. Gold prices in India had reached a record high of ₹56,200 on August 7 and since then prices have been volatile along with the movement in global rates.
In global markets, gold prices hit a two-week high today, supported by a weak US dollar. Spot gold rose 0.4% to $ 1,971.68 an ounce, after hitting $ 1,976 in early trading, its highest level since Aug. 19. US gold futures were up 0.4% at $ 1,982.50. The dollar index fell 0.2% and was on track for its fourth consecutive monthly decline.
Among other precious metals, silver was up 1.7% to $ 27.94 an ounce, while platinum was up 0.4% to $ 935.06.
“MCX gold appreciated as demand was driven by a weaker dollar and the new policy framework from the US Federal Reserve suggested that interest rates would remain low for some time. In the meantime, China’s manufacturing activity expanded at a slightly slower pace in August. Japan’s manufacturing output increased for a second month in a row in July. Investment demand has been subdued for some time. In the absence of significant intraday economic data, sentiment will be positive due to the weak dollar, “said Jigar Trivedi, fundamental commodities research analyst at Anand Rathi Stocks and brokers.
Gold was also supported by the new policy framework from the US Federal Reserve, which suggested that interest rates would remain low for some time, analysts say. Last week, Fed Chairman Jerome Powell said the central bank would adopt an average inflation target, which means rates are likely to stay low for longer.
Lower interest rates weigh on the dollar and also lower the opportunity cost of lowering the opportunity cost of owning non-performing gold. Similarly, a weak US dollar makes gold cheaper for investors who have other currencies.
“The announcement by the US Federal Reserve of a change in policy framework and a new approach to inflation raised expectations that the central bank would keep interest rates ultra-low to support the economy for as long as it was needed. Gold and silver gained while the dollar weakened also supported the price perception, “Geojit Financial Services said in a note.
Gold prices have risen by around 30% so far this year in global markets as investors are betting that the policies of governments and central banks will remain super stimulating for a longer period as coronavirus cases in the world exceeded 25 million on Sunday.
In India, the last tranche of sovereign gold bonds opens for subscription today. The Reserve Bank of India, which issues the bond on behalf of the government, has set the issue price at 5,117 per gram. Those who order online and pay online get a discount of ₹50 per gram.
On the physical side, Indian traders offered the biggest gold discounts in five months last week, as a drop in domestic prices failed to revive demand. Gold prices in India include 12.5% import duty and 3% GST. (With contributions from the agency)
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