Gold prices in India edged lower today after a sharp jump in yesterday’s session. On MCX, October gold futures were down 0.4% to ₹38,895 per 10 grams. Earlier, this week, gold futures hit a new high of ₹39,340 amid a global price rally and weakening rupee. Silver prices today also came off record highs. On MCX, September futures were down 0.3% to ₹45,834 per kg after hitting a new high of ₹46,026 in yesterday’s session.
In global markets, gold prices were steady today after a sharp jump in Tuesday’s session. Spot gold prices were unchanged in Asia at $1,542.25 per ounce, closer to its six-year high. Gold got a boost as the US yield curve inversion deepened on Tuesday to levels not seen since 2007, which sent US markets sharply lower amid deeper worries about the global economy.
Silver prices in global markets held around 2-year highs today after breaching the $18 an ounce in yesterday’s session. Spot silver today gained 3.14% to $18.18 an ounce.
The trade war between the US and China, which is into its second year, has triggering fears of a global economic slowdown, roiling equity as well as currency markets.
Many analysts have attributed the jump in silver prices to a catch-up rally after sharp rise in gold prices. Gold prices in India are up around 20% so far this year.
Apart from concerns about global slowdown and worries that a US-China trade breakthrough is not happening soon, gold prices have a boost from buying from central banks.
As many central banks diversify their portfolio, they are adding gold as global growth slows and trade and geopolitical tensions rise.
Many analysts expect this trend to continue. Central-bank accumulation of gold “has further room to run,” Deutsche Bank AG said in a report, as they gradually migrate reserve assets away from the dollar. Central banks added 374.1 tons in the first six months, helping push total bullion demand to a three-year high, said World Gold Council.
“Supporting gold price is continuing investor inflows. Gold holdings with SPDR ETF rose by 13.49 tonnes to 873.32 tonnes, highest since November 2016. Gold may witness choppy trade amid uncertainty about US-China trade conflict and Fed’s monetary policy however the general bias may be on the upside as trade concerns and global growth worries may keep safe-haven demand high,” Kotak Securities said in a note.
“Silver has benefitted from firmness in gold price and some stability in industrial metals,” the brokerage added.
In India, the sharp rise in gold prices this year has hit demand. “Domestic demand however remained weak due to higher price. Rise in silver customs duty from 10% to 12.5% has deterred buying interest,” Kotak Securities said in another note. (With Agency Inputs)
