- Gold prices jumped to Rs. 30,600 per 10 grams on Monday
- Gold rates were at around Rs. 28,000 at beginning of year
- Increased buying by local jewellers lifted domestic gold prices
Gold prices jumped to Rs. 30,600 per 10 grams on Monday - the highest level this year - tracking higher global rates. Gold prices were at around Rs. 28,000 at the beginning of this year. Increased buying by local jewellers also lifted domestic gold prices. In domestic markets, silver also moved up by Rs. 200 to Rs. 41,700 per kg on Monday backed by increased offtake by industrial units and coin makers. 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.
Why Gold Prices Are Rising
1) Gold prices jumped to their highest in nearly a year on Monday in New York as escalating tensions between North Korea and the United States and a weaker dollar persuaded investors to take refuge in assets perceived to be safe. Spot gold hit $1,339.47 on Monday, its highest since Sept. 27 last year, a time when the metal was benefiting from a surge of interest following Britain's vote to leave the European Union.
2) On the technical front, analysts say, North Korea's missile tests helped gold to break decisively through the $1,300 an ounce triple-top resistance, which now serves as support. Globally, prices of the precious metal used as a hedge against political and financial turmoil are up more than 7 per cent this quarter and more than 16 per cent this year.
3) A weaker dollar has also pushed up gold prices, making dollar-denominated gold cheaper for holders of other currencies, which could mean stronger demand. The US currency against a basket of other major currencies recently fell towards 90, to its lowest since January 2015, largely due to speculation the Federal Reserve is unlikely to raise interest rates as quickly as anticipated.
4) 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.
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.