Gold prices in India today hit a 5-month high

 

• The gold price in India has increased by around ₹3,000 in the last one month.

Gold prices in India continued the recent bullish trend while silver also gained ground. On MCX, gold futures rose 0.3% to a five-month high of ₹54,006 per 10 grams, tracking a firm rise in global rates. Silver futures rose 0.8% to ₹66,970 per kg. In global markets, gold rose to a five-month high as Chinese cities eased COVID-19 restrictions over the weekend. Spot gold moved above $1,800 an ounce, which also took support from the fall in the US dollar. Analysts say that China is the biggest consumer of gold and the easing of sanctions means that the demand for gold in the region will increase.

The dollar index was down near a five-month low today, making dollar-denominated bullion cheaper for overseas buyers.

Data released on Friday showed US employers hired more workers than expected in November and increased wages. Despite the strong employment data, many market participants expect the Fed to slow its pace of tightening.

“Gold has crossed the mark of $1800 an ounce on a weak dollar. Markets rejected solid US payrolls data. The market is not convinced that the Fed will be able to raise rates beyond 5% in this growth cycle. The 2-year yield had moved up from 4.18% to 4.40% soon after the jobs report, but is currently trading around 4.30%. The 10y yield currently stands at 3.52%. The dollar had strengthened after the jobs report, but gave up all gains later, IFA Global said in a note.

The prospect of slowing down of monetary tightening has pushed up gold rates in the last one month. Low interest rates are beneficial for gold as it lowers the opportunity cost of holding a non-yielding asset. In the last one month, gold in India has increased by about ₹ 3,000.

“Gold prices have seen massive price action, rallied by nearly $60/oz in last two weeks and is trading near $1800 levels. The rise in prices is mainly due to the accommodative commentary on the Fed's monetary policy. Looking to the month of December, the metal looks set to extend recent gains, due to a combination of soft inflation print, weak economic data points and a 90% chance of the Fed hiking interest rates by 50 bps on December 14." said Colin Shah, Founder and MD, Cama Jewellery.