Gold prices advanced for a third consecutive day despite an ease in Indian demand following a modest pick-up earlier in the week. The development comes following the release of weak US jobs data, reducing the chances of the Federal Reserve raising interest rates this year in order tackle inflation.
Despite prices rebounding from a three-month low, demand remained stagnant in India. Gold prices in the country rose to 148,046 rupees per 10 grams ($1,553) after having touched 140,450 rupees, the lowest level since March 27, on Tuesday, as per news agency Reuters.
China, on the other hand, saw a slight increase in buying interest.
Low chance of Feds hiking rates
As per data released on Thursday, US hiring tipped in June, suggesting that the labour market continues to struggle despite showing positive signs in the past few months. This may curb Feds from increasing rates during their next meeting scheduled in July which have been a headwind for non-yielding bullion.
Oil, a key determinant of inflation, has now showed signs of steadying as tankers start flowing through the Strait of Hormuz and US-Iran work on transforming their 60-day halt to hostilities via a memorandum of understanding into a loner pact for peace across West Asia.
“Lower energy prices and softer job growth suggest inflationary pressures are likely to ease in the months ahead,” Bart Melek, global head of commodity strategy at TD Securities, said in a note, as per new agency Bloomberg.
Also Read I Innovation exists everywhere, opportunity does not: UN pushes for AI governance
The reduction in Fed hike expectations likely prompted traders to cover short-gold positions established earlier, along with reducing incentive to liquidate long positions, which likely explains gold’s rally over the past few days, he said. “We believe gold is likely to rally only toward resistance at $4,280 an ounce.”
International spot gold was headed for its first weekly gain in five and traded above the $4,100 slab as US jobs data revealed low chance of rate hike.
Indian and Chinese markets
Due to volatility in international prices, gold prices fell by 8.4% in June, marking their first monthly drop since March. A premium up to $5 an ounce was quoted by dealers along with a discount of $7 over official domestic prices this week, inclusive of 15% import and 3% sales levies, compared to last week’s premium of up to $6.
“Many buyers were waiting for a price correction. Once prices corrected, they began making small purchases at the beginning of the week,” a Kolkata-based jeweller told Reuters. “Jewellers were purchasing, but volatile prices made them cautious. The lean demand season has now started, as there are no major festivals soon,” a Mumbai-based bullion dealer with a private bank later added.
Meanwhile, Silver prices rose 1.76 per cent to ₹2.37 lakh per kg in the futures trade on Friday amid firm global trend, as per news agency PTI. On the Multi Commodity Exchange, the white metal for July delivery increased by ₹4,096, or 1.76 per cent, to ₹2,37,400 per kilogram in a business turnover of 1,593 lots.
Also Read I India’s economy on sustained growth path: Government officials on financial resilience
China, on the other hand, traded at par to discounts of $2 an ounce to the global benchmark spot price, compared to the $3-$7 discount offered last week.
“$4,000 looks like a very good support at this moment, and I think the market will stay here for quite a while. However, there is still a lot of uncertainty, which is why people are hesitating to buy too much at this moment,” said Peter Fung, head of dealing at Wing Fung Precious Metals, told Reuters. “If prices fall back below $4,000, we could see some further buying interest on the dip.”
Current market prices
Here are the current 24k gold prices across various Indian cities in India, as reported by HT:
DELHI: 147,689
MUMBAI: 147,804.66
LUCKNOW: 148,784.83
CHENNAI: 149,179.64
BANGALORE: 147,849
AHMEDABAD: 149,065.62
HYDERABAD: 148,033.48
INDORE: 148,624.43
PUNE: 147,722
Also Read I Wired Wisdom: Xiaomi’s Nurburgring record, Apple hikes prices & Urbn’s impressive charging hub
Here are the current 10g silver prices across various Indian cities, as reported by HT:
DELHI: 2,336.1
MUMBAI: 2,337.82
LUCKNOW: 2,354.16
CHENNAI: 2,357.05
BANGALORE: 2,336.03
AHMEDABAD: 2,356.11
HYDERABAD: 2,339.76
INDORE: 2,349.55
PUNE: 2,335.54
Comex silver futures increased 2.17 per cent to USD 62.23 per ounce in the overseas market.