The silver and gold rate today saw a slump in the domestic futures market as there was a decreased demand for the precious metal from jewelers across the country. The demand from local jewelers pushed gold prices up during the last two days, but this decrease in demand has put a halt to that increase in price, resulting in a decrease.
MCX gold was trading at Rs 31,815 for 10 grams, after it fell by Rs 120 during the day of trading on Wednesday 12/12. MCX silver fell by Rs 52, as it is now trading at Rs 38,279 per kilo. These rates are from the start of the session on Wednesday, as there is still room for changes later during the day.
Meanwhile, prices for gold inched up in the global market, but maintained a capped range as the dollar maintained a one-month high against a collection of peer currencies across the globe. The increase in the dollar can also be attributed to the poor performance of the Pound, which is still rallying from the socio-political situation within Britain.
A stronger dollar impacts the prices of gold in ways more than one. Since most countries import gold at the rate of the United States dollar, a stronger dollar means that the cost of such imports goes up. This creates commotion in the market, with prices rising and demand for the metal falling. The prices for gold in India increased during the first two days of the week, but with the demand now decreasing, they have seen a decrease overall today.
“For intraday, Rs 31,700 is a key support for gold, whereas an upside move above Rs 32,100 will take prices towards Rs 32,400,” Reliance Commodities mentioned in a report.
Renewed Demand in India and China Will Support Gold Prices in 2019 – ABN AMRO
According to Dutch Bank, ABN AMRO, the renewed demand for gold in China and India would help dictate the price of gold across the world and reverse the price pattern of the precious metal.
The findings were made by the coordinator of FX and metal strategy at ABN AMRO, Georgette Boele. The report was published last week and mentioned that the renewed interest in gold from emerging markets will help swing the fortunes for the precious metal around. She specifically mentioned India and China as part of her findings.
“Chinese authorities are very cautious about letting the currency weaken beyond 7.00 versus the US dollar, as the risk is quite high that they would lose control over their currency,” she mentioned. “A weakening of the Chinese yuan beyond 7 versus the US dollar could spur speculation of capital outflows and they would like to avoid that, at least for now. Against that background, we expect that the Chinese yuan will recover in 2019. This should calm investors and improve investor sentiment towards gold.”
“Going forward, the 2y U.S. Treasury yields will probably rise in tandem with inflation expectations. So, real yields will likely not rise. All these factors support our view that the U.S. dollar has peaked and will weaken in 2019 and 2020,” Georgette said. “Therefore, we expect gold prices to rally in 2019.”