The prices of gold and silver rose today in Indian markets, following the positive trend of world rates. On MCX, October gold futures rose 0.3% to ₹51,600 per 10 grams to prolong gains until the second day. MCX September silver futures jumped 2% to ₹67350 per kg. In the previous session, gold had jumped ₹500 per 10 grams when the money had gained about ₹1000 per kg. Gold prices in India had reached a record high of ₹56,200 on August 7 and since then, prices have been volatile alongside the movement of world rates.
In world markets, gold prices today hit a two-week high, supported by the weak US dollar. Spot gold rose 0.4% to $ 1,971.68 an ounce, after hitting $ 1,976 at the start of trading – its highest level since August 19. US gold futures rose 0.4% to $ 1,982.50. The dollar index fell 0.2% and was on track for its fourth consecutive monthly decline.
Among other precious metals, silver jumped 1.7% to $ 27.94 an ounce while platinum rose 0.4% to $ 935.06.
Gold was also supported by the US Federal Reserve’s new policy framework which suggested that interest rates would stay low for some time, analysts said. Last week, Fed Chairman Jerome Powell said the central bank would adopt an average inflation target, which means rates are expected to stay low for longer.
Falling interest rates weigh on the dollar and also decreases the opportunity cost of decreasing the opportunity cost of holding unproductive gold. Likewise, a weak US dollar makes gold cheaper for investors holding other currencies.
“The announcement by the US Federal Reserve of a change in policy framework and a new approach to inflation raised hopes that the central bank would keep interest rates very low to support the ‘economy as long as necessary. Gold and silver gained while weakening the dollar also supported price feelings, “Geojit Financial Services said in a note.
Gold prices have risen by around 30% so far this year in global markets, with investors betting that government and central bank policies will remain very stimulating for a longer period as cases of the coronavirus worldwide exceeded 25 million on Sunday.
In India, the last tranche of sovereign gold bonds is now open for subscription. The Reserve Bank of India, which issues the bond on behalf of the government, set the issue price at 5,117 per gram. Those who apply online and make online payments get a discount of ₹50 per gram.
On the physical side, traders in India offered the highest discounts on gold in five months last week, as lower domestic prices failed to revive demand. Gold prices in India include 12.5% import duty and 3% GST. (With contributions from the agency)