Today’s gold prices in Indian markets maintained within a small range, with futures on the MCX trading between 50,065 and 50,386 rupees per gramme. In contrast, gold had closed the previous session at $50,200. Futures for silver increased by 1% from 56,640 per kilogramme. Spot gold prices were slightly higher on international markets, at $1,631.54 per ounce. Silver spot increased by 0.2% to $18.47 per ounce.
As part of Hindu celebrations, Dhanteras, which corresponds to the first day of Diwali in India, is said to be a lucky day to purchase gold and silver. The likelihood of additional monetary policy tightening by most central banks and rising rates in significant bond markets are putting pressure on gold prices.
The precious gold has fallen significantly from its $2,000 high in March. Prices in India reached a high of $55,000 in March. Following a larger-than-expected increase in US consumer prices in September, the Fed is largely anticipated to raise interest rates by 75 basis points at its policy meeting next month. Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, stated on Wednesday that the US job market demand was still robust and that underlying inflation pressures likely hadn’t crested yet.
Although gold is frequently regarded as an inflation hedge, rising U.S. interest rates raise the opportunity cost of owning the metal, which offers no dividend.
According to Jateen Trivedi, VP Research Analyst at LKP Securities, prices on the MCX witnessed some support as rupee depreciation helped the metal rebound off lows. However, gold prices remained in a range. Before recovering, the rupee today touched a new low of more than 83 against the US dollar. So far this year, the rupee has lost nearly 10% of its value against the US dollar.
In a note, Motilal Oswal said: “On the domestic front, gold and silver prices get a boost during festive season. Fall in precious metal was restricted following rupee depreciation that was to the tune of 10% coupled with hike in basic customs duty on gold imports by 5%. As India is a price taker any movement in COMEX affects our prices. Macro-economic backdrop does have an upper hand this year, major focus is on central bank’s monetary policy, inflationary pressure, and geo-political tensions. If there are any changes in these factors, we could see some short covering, which could take gold prices much higher and quicker, but we feel that till the time we don’t see a change in stance from major central bankers with respect to aggressive interest rate hikes, we could continue to witness pressure on gold prices.”