Domestic gold prices continue to scale new highs, gaining ₹1,351 per 10 grams on Friday, following cues from the global markets. The demand, however, was washed out ahead of the peak festival and wedding season.

The yellow metal opened firm at ₹72,967 per 10 grams and gathered pace to close at another fresh high of ₹73,174 against the previous close of ₹71,823, according to the Indian Bullion and Jewellers Association of India data.

Similarly, silver price was up by ₹1,476 per kg to close at ₹83,819 against ₹R82,343 on Thursday.

Weak demand

Kumar Jain, IBJA’s National Spokesperson said gold prices are expected remain high until Diwali, though demand has almost become zero as customers are waiting for prices to come down after a steady rise in the last few weeks.

“New jewellery purchases for the wedding season are made through exchange of old jewellery. The trend of recycling old gold jewellery has touched 180 tonnes a month and this is expected to go up further if prices continue to remain high,” he said.

With the weak demand and high prices, bullion imports into the country have come to a bare minimum due to a pick up in recycling of old gold jewellery, said Jain

Surging prices

In the last month, gold prices have jumped a whopping ₹7,608 per 10 grams to ₹73,174 from ₹65,566 per 10 grams logged on March 12.

On MCX, gold for June delivery hit a high of ₹72,740 per 10 grams against a previous close of ₹71,644 following the bullish trend in the US markets.

Gold prices in the US market hit a lifetime high at $2,401.80 an ounce on Friday .

Shrikant Chouhan, Head Equity Research, Kotak Securities said gold prices have reached a record high, driven by geopolitical uncertainties and the demand for safe-haven assets as investors are seek stability amid the current volatile environment.

In the US, the Producer Price Index for March rose by 0.2 per cent MoM and 2.1 per cent YoY, falling short of the US government expectations. This indicates that inflation has been sticky and falling at a slower pace, which might influence the US Federal Reserve’s monetary policy decisions, he said.

Analysts warned that the lack of progress in curbing price rises will force the US central bank to keep interest rates higher for longer. Higher rates help stabilise prices by making it more expensive to borrow for business expansions and other spending. This, in turn, will slow down economic growth and ease the pressures pushing up prices.