After the gold rate today plummeted sharply in the Indian domestic market, prices were seen to have recovered at lower levels. For every 10 grams, there was a slight improvement by about Rs. 60 or $0.85 to Rs. 32,060 ($454.2) and Rs. 31,910 ($451.98) for 99.9% and 99.5% variants respectively. This sharp rise in domestic gold prices is largely attributed to jewelers buying gold at lower levels and the relatively high global prices.
In contrast, silver rates have fallen by a sharp Rs. 85 ($1.20) to Rs. 38,315 ($542.75) per kg because of a steep decline in market supply by industrial manufacturers.
The much needed recovery of gold came after its price fell by Rs 350 ($4.96) in the last two sessions. However, the price of sovereign gold did not change, and it remained stable at Rs. 25,000 ($354.53) per eight grams. Sovereign silver prices fell by Rs. 85 ($1.21) to Rs. 38,315 ($543.36) while weekly deliveries plunged by Rs. 49 ($0.69) to Rs. 37,881 ($537.28). Silver coins retained their price at Rs. 74,000 ($1,049.6) for buyers and Rs. 75,000 ($1,063.8) for sellers per 100 pieces.
The Indian domestic market for gold largely depends on the rupee-dollar foreign exchange rate, import duties, and global prices, because gold is not produced locally and is imported by the government. While gold continues to be seen favorably in domestic markets, its demand fell by about 23% last year from 1,000 tons in 2010.
Gold futures in Mumbai, India’s largest city, continue to get annual gains every year because domestic prices have inched higher, thanks in part to the lower value of the Indian rupee, which plummeted to the lowest value observed so far this year.
Global markets for gold are also looking good, with prices bolstering this week. With the US Federal Reserve’s inclination to soon raise interest rates, gold will only continue to rise in prices. This will raise expectations for bullion traders who are looking forward to higher gains in the year 2019. Spot gold will continue to remain in the ballpark range of $1,253 to $1,248 per ounce after rising by up to 0.18 percent, according to a Reuters analyst named Wang Tao.
Investors will return to gold due to the predicted economic turmoil in the equity market as a result of the higher interest rates imposed by the US Federal Reserve.
The dollar has been observed to fall while stocks haven’t fared any better, owing to concerns over the wavering global economic growth. The vice president of investment services at Dillon Gage Metals was reported to have said that the economy has gone down, including equities, bonds, and commodities.
When interest rates are expected to increase, the bullion tends to gain due to lower opportunity cost of gold. Most economists, including analysts at Standard Chartered, predict gold prices to skew higher in 2019. The same market principles do not apply to other metals like silver and palladium, which have plummeted in prices.