Gold prices rose in India on Monday, according to data from India’s Multi Commodity Exchange (MCX).
Gold price stood at 60,784 Indian Rupees (INR) per 10 grams, up INR 755 compared with the INR 60,029 it costed on Sunday.
As for futures contracts, Gold prices decreased to INR 60,655 per 10 gms from INR 60,722 per 10 gms.
Prices for Silver futures contracts decreased to INR 72,794 per kg from INR 73,360 per kg.
| Major Indian city | Gold Price |
|---|---|
| Ahmedabad | 62,895 |
| Mumbai | 62,760 |
| New Delhi | 62,885 |
| Chennai | 62,890 |
| Kolkata | 62,880 |
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Global Market Movers: Comex Gold price struggles amid optimism over China stimulus
- Comex Gold price struggles, despite firming expectations that the Federal Reserve (Fed) will not hike interest rates amid signs that the high-prices nightmare has ended.
- The US CPI report last week indicated that consumer inflation was cooling faster than anticipated, while the US Jobless Claims last Thursday pointed to a cooling labor market.
- The markets seem convinced that the Fed will leave rates unchanged at its December 2023 policy meeting and are pricing in nearly 100 bps of rate cuts by the end of 2024.
- A turnaround in expectations for the Fed’s future policy action dragged the benchmark 10-year US Treasury yield to a two-month low on Friday and benefit the non-yielding metal.
- The US Dollar languishes near its lowest level since September and is seen as another factor lending support to the XAU/USD ahead of the FOMC minutes on Tuesday.
- The escalation of violence between Israel and Hamas has sparked concerns about its potential impact on the world economy and, in a worst-case scenario, could push it into recession.
- Israel and the US rejected reports of a potential breakthrough in negotiations with Hamas to free some of the 240 hostages in Gaza in exchange for a five-day pause in the war.
- The People’s Bank of China kept its Loan Prime Rate (LPR) near record lows, as widely expected, and also injected about 80 billion Yuan of liquidity into markets.
- Chinese regulators vowed to provide more policy support to the beleaguered real estate sector, boosting investors’ confidence and capping the safe-haven XAU/USD.Â
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
