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Gold prices rise for the third straight day, silver gains too
Gold had risen ₹300 per 10 gram while silver had jumped ₹1,800 per kg in the previous session.
Gold rose above ₹52,000 per 10 gram on Tuesday, extending gains to the third day, in Indian markets tracking global prices that were holding steady near a two-week high on a weaker dollar.
October gold contracts traded higher by 0.7% at ₹52,067 per 10gm in the morning on the Multi Commodity Exchange (MCX). Silver futures on MCX jumped 1.2% to ₹71,300 per kg. Gold had risen ₹300 per 10 gram while silver had jumped ₹1,800 per kg in the previous session.
Gold, however, is still down by ₹4,000 from August 7 highs of ₹56,200 per 10 gram.
Globally, gold prices rose to their highest level in nearly two weeks after the dollar slipped to multi-year lows on bets that US interest rates would stay lower for a longer period after the Federal Reserve’s new policy framework.
Spot gold was up 0.9% at $1,986.81 per ounce by 0502 GMT, after hitting its highest since August 19 at $1,989.19 earlier in the session. US gold futures rose 0.8% to $1,995.20.
“With the greenback expected to remain weak, we expect gold to grind higher and revisit the $2,000 an ounce level initially,” Jeffrey Halley, a senior market analyst at OANDA, was quoted as saying by Reuters.
The dollar index dropped to a more than two-year low against its rivals, making gold cheaper for holders of other currencies. The Fed’s new monetary policy strategy, which could result in inflation moving slightly higher and interest rates staying lower for longer, has triggered a sell-off in the dollar, driving inflows into safe-haven bullion.
The US central bank’s new approach to monetary policy means a low unemployment rate on its own doesn’t warrant higher interest rates, Fed vice chair Richard Clarida said on Monday.
“Expectations of lower for longer when it comes to US interest rates and continued weakness in the USD index are setting a favourable environment for precious metals, especially gold,” ING analyst Warren Patterson said in a note, according to Reuters.
Low interest rates reduce the opportunity cost of holding non-yielding bullion, which is also used as a hedge against inflation and currency depreciation.
The United States said on Monday it was establishing a new bilateral economic dialogue with Taiwan, a decision that could worsen relation between Washington and Beijing as China claims Taiwan as its own territory.
Elsewhere, silver jumped 1.7% to $28.69 per ounce, its highest since Aug. 11. Platinum rose 1.6% to $944.40 and palladium climbed 1.6% to $2,279.61.
(With Reuters inputs)
