Following steady global rates, today’s gold and silver prices in Indian markets edged higher. On MCX, October gold futures were up 0.7% to regain Rs52,000 levels per 10 gram, extending gains to the third day. Silver, on the other hand, rose 1.2 per cent to Rs 71,300 per kg.
Gold had previously risen to Rs300 per 10 gram as silver then jumped Rs 1800 per kg. With gold nonetheless bouncing back from recent lows, it is down Rs 4000 from August 7 highs of Rs 56,200 per 10 gram.
Internationally, gold prices remained almost unchanged at a nearly two-week high, supported by a weak US dollar. Spot gold was steady at $1,968.98 per ounce. The dollar index fell to a near two-year low at 91.81 against a basket of other currencies, making gold less expensive for holders of other currencies. Among other precious metals, silver fell 0.2% to $28.17 per ounce, platinum rose 0.3% to $931.87, and palladium dropped 0.3% to $2,235.64.
Kotak Securities discussed the current scenario in a note, “Gold is also supported by rising virus cases globally and renewed worries about US-China tensions. Rising virus cases globally has raised doubts about the sustainability of the recent economic recovery.”
Meanwhile, the brokerage said that weighing on the gold price is mixed ETF activity, weaker consumer demand and continuing rise in global equity markets.
“Gold has bounced back sharply from recent lows indicating buying interest in the market. But we recommend some caution as US dollar may turn volatile market focus shifting from Fed to other issues,” Kotak added. The previous week, US Federal Reserve Chairman Jerome Powell signalled that the US central bank would remain accommodative for a more extended period through more tolerance of inflation, a stance that drove US stocks to new records and the dollar lower.
On Monday, Fed Vice Chair Richard Clarida on Monday expanded on Powell’s comments saying that under the US central bank’s new policy view, a low rate of unemployment does not on its own trigger higher interest rates.
Lower interest boosts gold as it reduces the opportunity cost of holding non-yielding bullion.