Jewellery stores remained deserted as buyers deferred their non-essential purchases awaiting softness in gold prices.
Standard gold price in India on Thursday recorded the highest single-day gain of 2.21 per cent in recent years, following a sharp spurt in its prices in global markets on the US Fed’s dovish stance on economic growth in the United States.
The data compiled by the India Bullion and Jewellers Association (IBJA) showed standard gold price at Rs 33,559 per 10 gm in Zaveri Bazaar in Mumbai on Thursday, barely 0.3 per cent lower than the all-time high of Rs 33, 716 in February this year.
On Wednesday, Standard gold price in Zaveri Bazaar was Rs 32,851 per 10 gm.
Oil prices, too, jumped on Thursday but on rising US-Iran tensions, with gains accelerating on a cryptic tweet by American President Donald Trump after Iranian forces shot down a US spy drone.
At 8.35 pm IST, US benchmark West Texas Intermediate climbed 6.3 per cent to $57.13 a barrel, while Brent futures in London gained 4.7 per cent to $64.69 a barrel.
Base metals remained resilient to trade, with a marginal gain on the London Metal Exchange (LME).
“The sharp spurt in gold prices can be attributed to the dollar’s weakness. The US Fed in its last meeting changed the narrative.
"So far, the narrative has been that the dollar interest rate is going up.
"But, the Fed is now turning dovish due to the ongoing trade talks, with the delay affecting the US economy.
"Thus, the Fed signals problems in the US economy with steady interest rate cuts.
"Consequently, crude and base metals did not follow the speed of surge in gold prices,” said Gnanasekar Thiagarajan, director, Commtrendz.
On Wednesday, the US Federal Reserve hinted at interest rate cuts beginning as early as July, saying it is ready to battle growing global and domestic economic risks as it took the stock of rising trade tensions and growing concerns about weak inflation.
Lower interest rates, in fact, decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, thus making gold cheaper for investors holding other currencies.
In the US, gold price hit the highest in five years in the late Wednesday trade as investors sought refuge in the bullion as a safe haven.
Spot gold was up by 2 per cent at $1,386.38 an ounce, the highest since March 17, 2014.
The gold price traded at $1,382.87 an ounce in London on Thursday.
“Gold has given a breakout above $1,365 an ounce, which could lead to a sustained upmove towards $1,430-1,440 an ounce.
"Domestic gold prices also holding firm above the breakout level of Rs 33,400 per 10 gm could trigger a further upside to Rs 34,300 per 10 gm in the short term,” said Navneet Damani, vice president, Motilal Oswal Financial Services.
Both Gnanasekar and Damani forecast gold price in the rupee term at Rs 35,000 per 10 gm in the near term before investors start a pullback from riskier assets like bullion for investment in equity markets.
On India’s Multi Commodity Exchange (MCX), gold futures for delivery in August jumped by 2.31 per cent to trade at Rs 33,844 per 10 gm.
Silver and crude oil futures also moved up by 2.43 per cent and 2.7 per cent to Rs 38,210 a kg and Rs 3,876 a barrel for delivery in July, respectively. Copper and zinc futures jumped, too, jumped, albeit marginally.
Meanwhile, jewellery stores remained deserted as buyers deferred their non-essential purchases awaiting softness in gold prices.
Photograph: Shailesh Andrade/Reuters
© 2024 Rediff.com -