Tailing the global rally, gold prices in India made a new all-time high at ₹38,715 per 10 grams (999 purity) in spot markets on Monday, rallying by nearly ₹4,100 so far in August.
Prices as quoted by the India Bullion and Jewellers Association (IBJA), showed spot gold hitting a high of ₹38,960 during the day.
Gold has gained momentum after multiple global events since Friday, which have triggered safe-haven demand for the yellow metal.
Also, adding the to fuel for gold rally is the depreciating rupee against the dollar, which was quoted at ₹72.02 against the dollar.
“The rupee depreciation pushed up the gold prices. Two major global events, the US-China trade war and the Fed Chairman’s speech on measures to sustain the US economic expansion, accelerated the rally.
We saw Comex gold rallying after this to touch$1543, which was echoed in the Indian market and we saw the gap-up opening today,” said Ajay Kedia, Director, Kedia Commodity.
Firm trend
Kedia expects gold prices to stay firm going forward and may test $1,580 in near term in international markets, triggering prices in India to inch towards ₹40,000.
Industry players believe that besides the currency and the US-China trade war escalation factors, a weak economic outlook and geo-geopolitical tension in West Asia and India-Pakistan tensions indicate one-sided worry.
“There is no immediate relief in sight from these tensions in near future. Comex gold will touch about $1,580 from current levels. So in India we may see ₹41,000-41,500 levels even if there is a festive season. Such high price levels will affect the festive buying as well and we may not see a sparkling festival season for the gold and jewellery sector this year,” Haresh Acharya, director, IBJA told Businessline .
He added that due to reduced discretionary spend by consumers, gold buying will remain under pressure.
In Futures market, MCX October Gold opened firm and traded around ₹39275 in early hours, but moved lower at ₹38,993 by later hours. Futures prices have rallied by over ₹1,500 within a week from ₹37,745 recorded last Monday.
CME Gold for August delivery has also witnessed a rally of over $50 an oz during past one week.
On Monday trades, CME Gold for August traded at$1525 an oz, marginally down from previous close.
Indicative of sentiment, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, have increased by about 27 tonnes so far this month.