Gold prices in India today hit new highs amid weakness in the rupee. Gold rose ₹200 to a record high of ₹38,770 per 10 gram in Delhi, even as the precious metal lost steam overseas, Press Trust of India reported, citing All India Sarafa Association. Silver prices however plunged ₹1,100 to ₹43,900 per kg. In Delhi, gold of 99.9% and 99.5% purity gained ₹200 to ₹38,770 and ₹38,600 per 10 gram, respectively while silver ready plunged ₹1,100 to ₹43,900 per kg.
In futures markets also gold logged gains, reversing early losses. On MCX, October gold futures were trading 0.43% higher at close to ₹38,000 per 10 grams, after falling to ₹37,678 in early session. Silver also logged gains in futures markets on MCX, rising to ₹43,669 per kg.
The rupee today weakened to as much as 71.80 against the US dollar, as compared to Monday’s close of 71.43, raising the imported cost of gold.
In global markets, gold prices rebounded above $1,500 an ounce today, following the previous session’s steep fall, with focus shifting to US Federal Reserve’s Jackson Hole seminar this week for clues to future interest rates. The Fed’s minutes from its July policy meeting are also due this week.
However, many analysts remain positive on gold despite the recent pullback in prices: Accommodative central banks, continuing US-China trade tensions, weaker rupee, and fears of slower global growth will continue to provide support to gold prices, they say.
Veteran investor Mark Mobius said that accumulating gold will reap rewards over the long term as leading central banks loosen monetary policy
Gold investors will be focusing on this week US Federal Reserve’s Jackson Hole symposium for greater clarity on the future path of interest rates. Lower interest rates brings down the opportunity cost of holding of non-yielding asset classes like gold and weigh on the dollar, making gold cheaper for investors holding other currencies.
Back in India, record high prices, coupled with a rise in import duty and slowing economic growth, have dampened demand. Gold futures prices are up around 20% in India since the start of the year, in tandem with overseas spot gold, which has rallied to a six-year high.
Gold imports into India, which meets almost all its requirements through imports, fell over 40% this July to $1.7 billion. A fall in gold imports has helped India narrow trade deficit to $13.4 billion for the month of July, much lower than monthly run rate of about $15 billion over the past three months, according to analysts.
Heavy rains that have caused floods in some of the biggest gold-buying states such as Kerala and Karnataka have also hurt demand. If gold prices remain high during the forthcoming festive season, it could be a dampener for sales in India, say analysts.