Gold & Silver

Spot Gold prices in India down ₹300 on softer demand outlook

Rutam Vora Ahmedabad | Updated on August 01, 2019 Published on August 01, 2019

Representative image   -  Bloomberg

Fed rate cut fails to lift sentiment globally as COMEX Gold falls

Spot gold prices in India dipped by Rs 290 on Thursday and quoted at Rs 34,633 per 10 grams (999 purity), down from Rs 34,923 reported on Wednesday.

Notably, spot gold prices dropped by close to Rs 400 since Tuesday.

In Futures, the immediate contract, MCX August Gold fell by 0.50 per cent or Rs 175 in morning trades to trade at Rs 34,342 per 10 grams. The October contract also showed weaker trend at Rs 35,101, down by 0.9 per cent or Rs 318.

Two important news developments influenced the gold movement on Thursday:

1. The World Gold Council (WGC) in its latest outlook stated that India's gold demand is expected to soften in the September quarter as persistent higher prices hampered buying activity in physical market. Notably, spot gold prices have risen by about 10 per cent so far this year.

2. After its two-day Federal Reserve's Open Market Committee (FOMC) on Wednesday, the Fed Chief, Jerome Powell, announced a rate cut of 25 basis points (bps)- the first rate cut after 2008 financial crisis. However, Powell also gave clear indication of no more rate cuts were in the offing in near future.

"Let me be clear it's not the beginning of a long series of rate cuts," Powell said after the Fed released its latest policy statement on Wednesday. But he clarified later by saying that it wasn't only one rate cut this time.

This, however, came as a dampener for the gold prices, which reported a decline.

COMEX August Gold prices

COMEX August Gold fell $18.3 to trade at $1407.8 as against $1426.1 an ounce.

Silver prices too reported a decline. COMEX August silver fell by $0.331 to $16.015 per ounce.

The Global financial markets had expected the Fed to cut its key overnight lending rates by 25 basis points from the current target range 2.25-2.50 per cent to 2.00-2.25 per cent.

"The Fed cut the rates by 25 bps, this effectively takes the key rate levels back to December 2018. The Fed statement is hawkish enough and it looks that there will be no immediate another rate cut in next 2 meets.

"As of now, gold is still in its choppy range of $1405-1440 levels. Once it breaks 1395, we may see it towards 1378-1362-1348. That would be an opportunity to rebuild inventory. Or add gold to your investment portfolio," said Biren Vakil from Paradigm Commodities giving a price outlook on the yellow metal.

He added that base line scenario is upbeat and gold may surpass $1500 level but it will have to face a tough road ahead.

Published on August 01, 2019
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