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The sharp rupee depreciation against dollar and intensifying global trade war pushed up pure gold prices in Mumbai by ₹897 per 10 grams to ₹36,310 against ₹35,413 logged on Saturday.
Gold (0.995 purity) increased to ₹36,165 (₹35,271) while gold of 0.916 purity jumped to ₹33,260 (₹32,438), according to Indian Bullion and Jewellers Association data.
Contributing factors
Besides the simmering trade war between the US and China, the global and domestic economic slowdown and scrapping of Article 370 in Kashmir forced investors to consider gold as a safe haven for investment. Silver prices closed at ₹42,035 per kg against ₹40,755 registered on Saturday. Gold prices in India gained an additional 2.5 per cent as the government raised import duty on gold to 12.5 per cent from 10 per cent last month.
Ajay Kumar, Director, Kedia Commodity, said that while the US Fed decision to cut rates by 0.25 per cent to two per cent late last week dented gold prices, it bounced back after the US President levied incremental tariffs on China.
Besides the trade war, the slowing global economy has also forced investors to consider gold as a safe haven, he added.
Market participants are cautious with RBI’s Monetary Policy Committee meeting starting today and the outcome of the meeting is expected on August 7, said Kumar.
Future looks bright
The MCX gold for October delivery breached the lifetime high of ₹37,077 per 10 grams but closed at ₹36,992 with a gain of two per cent The near month contract opened on a high note at ₹36,650 against the previous close of ₹36,271 and touched a low of ₹36,994.
Last week, gold prices on MCX gained by ₹2,683 per 10 gram to gain nearly eight per cent to settle at ₹36,271 with expectations of geopolitical and trade war intensifying further. Following this central banks have been loading up gold to their reserves pushing up gold prices further.
Rahul Gupta, Research Head (Currency), Emkay Global Financial Services, said the global trade turmoil between the US and China and political imbalance in Kashmir led spot dollar-rupee open at 11-week high.
Trade tensions were revoked after China retaliated to counter the tariff threat and asked its state purchasers to halt imports of American agricultural products. This lead Chinese yuan drop to a 11-year low of 7.04, putting pressure on other emerging market currencies, including rupee. The risk-off mood will continue to stay for some time now, he said.
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