Gold futures on the Multi Commodity Exchange (MCX) rose to a record new high of ₹56,245 per 10 gram today, breaching the previous high of ₹56,191 registered in August 2020, mirroring the bullish trend in the global markets where the bullion topped $1,900 an ounce. A weakness in the dollar index too drove the bullion metal higher.

The yellow metal is gaining traction on hopes that the recent fall in inflation will lead to the US Federal Reserve turning dovish on its monetary policy stance in the coming days as its economy faces the risk of slipping into a recession.

The yellow metal for February delivery on NYMEX touched a high of $1,903 an ounce on Thursday as the annual inflation rate in the US slowed for the sixth straight month to 6.5 per cent in December, in line with market forecasts. This may lead to the US Fed cutting down on the quantum of rate hikes in the coming days.

India trends

Gold prices in the Indian spot market jumped ₹365 per 10 grams to ₹56,462 on Friday against ₹56,097 on Thursday, according to the Indian Bullion and Jewellers Association.

In the past month, gold prices have jumped five per cent from ₹54,030 on December 13.

Ajay Kumar, Director, Kedia Commodity, said gold prices in India have gained over 17 per cent in the past year even as the demand remained lacklustre with no immediate trigger such as festival or wedding season round the corner.

Imports plunge

India’s gold imports in December plunged 79 per cent to 20 tonnes, the lowest in last two decades while overall imports dropped to 706 tonnes last year from 1,068 tonnes logged in the previous year, he said.

Ghazal Jain, Fund Manager- Alternative Investments, Quantum AMC, said the cooling off of the US dollar and yields have been supporting gold while the robust buying by global central banks and the opening up of the Chinese markets will have further positive impact on the demand for the precious metal.

While the Federal Reserve continues to maintain that it will not back off on its inflation fight till it sees price pressures come down meaningfully, markets are pricing in peak Fed aggressiveness to settle down by mid-2023 given the deteriorating economic situation, he said.