Gold prices rose higher on Tuesday, as the dollar cooled down and US Treasury yields dropped sharply during overnight trade, which heightened the bullions’ appeal. Back home, the festive season is lifting sentiments for gold.
US manufacturing activity grew at its slowest pace in nearly two and a half years in September as new orders contracted amid aggressive interest rate hikes by the Federal Reserve to cool demand and tame inflation.
Gold futures on the
were trading up 0.25 per cent or Rs 40 to Rs 51,290 per 10 gm. However, silver futures were rallying higher by 1.44 per cent or Rs 878 to Rs 61,789 per kg.
Gold is seen as a hedge against inflation, higher interest rates increase the opportunity cost of holding bullion that pays no interest.
Gold prices remained quite volatile, said ICICI Direct Research. “Gold found some support from the geopolitical front as Russian President Vladimir Putin’s move to mobilise more troops over the conflict in Ukraine drew investors to the safe-haven asset.”
India has raised import duty on platinum to 15.4 per cent from 10.75 per cent, the government said in a notification on Monday, seeking to bring parity in the import duty structure between gold and platinum.
The physical gold market in India flipped to a premium last week as demand improved ahead of festivities. India, the world’s second-biggest consumer of gold, slashed the base import prices of the metal on September 30.
In the spot market, gold in its highest purity form, was sold at Rs 50,387 per 10 gm while silver was priced at Rs 57,317 per kg on Monday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have gained more than Rs 1,050 per 10 gm in the last two weeks, whereas silver has jumped more than Rs 2,000 per kg last week.
Ravindra V Rao, CMT, EPAT VP- Head Commodity Research, Kotak Securities, said gold rises as dollar and US treasury yields continue to fall. The US Dollar Index has been showing signs of exhaustion since it tested two decades high.
“Disappointing US ISM manufacturing data has raised concerns of slowing economic growth that might force the federal reserve to slow the pace of rate hikes,” he added. “It can sustain higher levels if the dollar continues to move southwards.”
Trading strategy
Ravi Singh, Vice-president and Head of Research, ShareIndia, said the weakness in dollar index and treasury yields has induced lower levels buying due to short coverings in gold.
He has suggested buying gold above Rs 51,300 for the target of Rs 51,600, whereas one can short the yellow metal below Rs 50,900 for the target of Rs 50,700.
Global markets
Spot gold was down 0.2 per cent at $1,696.04 per ounce, as of 0135 GMT, having touched its highest since September 14 at $1,702.39 earlier in the day. US gold futures rose 0.2 per cent to $1,705.7.
Spot silver dipped 0.5 per cent to $20.64 per ounce, platinum dropped 0.3 per cent to $899.50 and palladium was up 0.7 per cent at $2,236.84.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)