A weakening rupee and higher demand from domestic jewelers helped lift gold prices in the Indian market today. The gold rate today in India rose by some Rs 155 to reach a cumulative price of Rs 32,650 for 10 grams during the day. Silver prices also surged ahead by a massive Rs 425, as they ended the day on a strong price of Rs 38,575 for the day of trading on Tuesday 11th December. This increase in price for Silver is believed to be caused by a strong demand from coin makers and industrial units in the capital.
Gold prices had earlier increased by Rs 145 on 10th of December, as gold in India enjoyed a strong start to the week. Prices of gold within the country are currently marked at Rs 32,650 and Rs 32,500 for gold of 99.9 percent and 99.5 percent respectively. There was an increase of Rs 155 for the prices of both forms of purity. The Press Trust of India reported that sovereign gold in the country is steady at Rs 25,000 for a piece of 8 grams. Sovereign gold is not nearly as volatile as spot gold and does not show as much volatility as the sister concept does.
Silver ready rates saw a good increase in the market today, as they rose by Rs 425 to reach the price of Rs 38,575 for a kg. The rates for silver weekly based delivery increased by Rs 269 to end the day at Rs 38,159 per kg. Silver coins showed the same non-volatility of sovereign gold, as they remained put at prices of Rs 75,000 for selling and Rs 74,000 of buying of 100 coins.
The Indian rupee today weakened against the US dollar and reached rates of 72.5 in the open market. It did pull back some gains later on, but it was too little too late. A depreciating rupee increases the importing cost of gold and hence increases the price in the market.
The global markets saw a steady increase in the prices of gold on Monday 10th December. The market was filled with predictions and expectations that the United States Federal Reserve might just halt the rate hike cycle sooner than it was previously expected. The cost of spot gold went up by 0.3 percent in the market to reach rates of $1,247.9 per ounce. The rates for spot gold had previously touched a 5 month high of $1,250.55 on Monday. Traders are currently focusing on the meeting of the Federal Reserve to be held on the 18th and 19th of December. Lower Interest rates for the dollar reduce the opportunity cost of holding bullions like gold and ensure that investors don’t run off towards the currency.
“Weakening US dollar outlook and very dovish pivots from the Fed, a lot of uncertainty boxed around equity markets… It can still turn quite negative, so this is why gold remains a good hedge against a lot of market risks,” said Stephen Innes, who is the trading head for APAC at OANDA in Singapore. “I am very bullish on gold in this setup into 2019.”