- Gold prices surged to Rs 30,600 per 10 grams
- Some analysts expect global gold prices to rise further
- Domestic gold prices closely track global prices
5 Things To Know About Rising Gold Prices
Domestic gold prices closely track global prices, as India meets almost all its requirements from imports. Besides that import duties and the dollar-rupee value also affects domestic gold prices.
Some analysts expect global gold prices to advance further. A weaker dollar also underpinned gold, which was likely to continue to rally in coming days, according to Tom Kendall, head of precious metals strategy at ICBC Standard Bank.
Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-interest yielding bullion.
Some analysts also don't see an immediate Fed rate hike and the shrinkage of the US central bank's massive sheet. On Friday, after a US government report showed employers added fewer jobs in August than expected, some traders held to expectations that the Federal Reserve would wait until the middle of 2018 before raising rates. "Another plus for gold is that we don't see an immediate rate hike and the shrinkage of the Federal Reserve's balance sheet," said Mark To, head of research at Hong Kong's Wing Fung Financial Group.
Investors were also looking ahead to a European Central Bank (ECB) meeting on Thursday. Markets are expecting no policy change from the ECB this month but the bank is likely to announce a reduction of its monthly asset purchases in October, according to a majority of economists in a Reuters poll.