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Having rallied by over 9 per cent or ₹3,000 per 10 grams (999 purity) in spot markets so far during August, the yellow metal took a pause on Monday in one of its sharpest rallies in recent times.
Analysts attribute this pause to an expectation of a stimulus by major central banks across the globe, leading to appreciation of the US Dollar and rising investor preference for riskier assets, including equities.
Spot gold prices as quoted by the India Bullion and Jewellers Association (IBJA) stood at ₹37,610 per 10 grams as against the last quoted ₹37,640 on August 16. The historical trend showed prices had started the month with ₹34,633 for 10 grams and rallied to a peak of ₹37,832 per 10 grams on August 13.
However, MCX October futures opened negative to trade at ₹37,745, down by ₹193 or 0.5 per cent and fell further during the day to touch ₹37,699, down 0.6 per cent from the previous close.
CME Gold for August delivery fell by about $10 during the Monday session to trade at $1,496 an oz by evening, down by $16 from the previous close.
Pullback expected
Speaking to Businessline , Ajay Kedia from Kedia Commodities said: “There is no fresh news in the market, which can give support to the prices. So, we expect a bit of a pullback at the level of $1,470-1480 in gold. Amid weak demand in the physical market we expect prices to remain under pressure this week. There is a possibility of a corrective drop in the prices due to domestic triggers and the international news will hold the prices.”
Jewellers, on the other hand, see subdued demand due to persistently higher prices of the yellow metal. “Prices have remained firm all through August and we see no sign of cooling off in the immediate future. However, at these high rates we see thin buying in jewellery,” Rasikbhai Parekh from Rajkot told Businessline .
Commenting on the outlook, Angel Research, in its commodity report, said: “We expect gold and silver prices to trade lower as expectations of a stimulus by major central banks led to appreciation of the US Dollar and shifted the investors towards riskier assets.”
Silver rally
Silver prices, too, have rallied during August but at a slower pace than gold. Silver prices as quoted by IBJA have gained ₹3,540 so far in August, while the rise in prices was much sharper in July, when silver jumped by ₹3,725 during the month. IBJA rates for silver quoted at ₹43,345 per kg in the spot market.
On MCX futures, Silver for September delivery skidded further on Monday to ₹43,368, down ₹456 or over 1 per cent from its previous close.
CME Silver for September delivery traded lower at $16.9 an ounce on Monday from its previous close of $17.12.
Some of the global factors influencing the price movement of precious metals include a fall in US 30-year bond yields, which supported bullion prices recently, and pushed gold up.
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