Silver and gold prices in India extended their record run today amid a rally in precious metal prices. News agency IANS reported gold touching a new high of ₹40,000 per 10 gram in Mumbai. On MCX, October gold futures were firm today, rising to a new high of ₹39,340 per 10 grams before paring some gains. They were up 0.45% at ₹38,945 in latest trade. Tracking gold, silver September futures on MCX also hit a new life-time high of ₹45,342 per kg. In latest trade, silver futures were up 0.78% to ₹44,952. Escalating trade tensions between US and China and fears of a global recession has pushed gold prices to new highs in global markets.
Asian equity markets were under pressure today as US-China trade tensions sent investors rushing into safe havens such as gold and sovereign bonds. Emerging market currencies, including the rupee, were also under pressure. A weaker rupee increases the imported price of gold in India.
In global markets, spot gold prices rose over 1% to $1,544.23 per ounce – their highest since April 2013 – getting a boost from a slide in bond yields. Yields on US 10-year Treasury debt dropped to their lowest since mid-2016. Lower interest rates boosts the price of gold.
The escalating trade war between US and China overshadowed somewhat dovish comments from US Federal Reserve chief Jerome Powell. US President Donald Trump on Friday announced additional duty on $550 billion in targeted Chinese goods, hours after China unveiled retaliatory tariffs on $75 billion worth of U.S. products.
Federal Reserve Chair Jerome Powell on Friday promised to “act as appropriate” to keep the US economy healthy, although he stopped short of committing to rapid-fire rate cuts. Amid signs that that the US-China trade dispute is not headed for a speedy resolution, traders are betting that US Fed will act aggressively on the rate front.
“The US-China trade war with new tariff announcement has pushed gold and silver prices to a new six-year high as investors rushed for safe-have assets. Depreciating Indian rupee also helped the rise in prices. We expect the current trend to continue for gold and silver. On the MCX, gold is likely to move towards 39,900 to 40,000 levels. 38,800 and 39,000 may act as a strong crucial support levels for gold on the downside, ” says Pritam Kumar Patnaik, head of commodities at Reliance Commodities.
He expects positive trend to continue for silver with prices expected to move higher “towards 48,000 levels in coming days with 45,900 and 46,200 as support levels on downside.”
Back in India, assets managed by gold exchange traded funds or gold ETFs rose to ₹5,079.22 crore in the first four months of the current fiscal.
Globally, total gold-backed ETF holdings rose to 2,424.9 tons, about 1,000 tons higher than the post financial crisis lows of 1,425.1 tons, according to a recent Bloomberg report.
Record high gold prices, which are up over 20% in India so far this year, have however hurt jewellery demand in India. Jewellerers have also reported a rise in supply of old gold jewellery as customers take advantage of high prices. (With PTI inputs)