Gold prices topped the psychologically important mark of Rs 27,000 per 10 gram due to strong cues from global markets and also due to increase in domestic buying by the jewellers during the ongoing wedding season. A weak rupee also led to hardening of gold prices as imports of the yellow metal became costlier.
In the national capital Delhi, the price of gold of 99.9 per cent purity went up by almost 1.5% to reach Rs 27,130 per 10 gram on Wednesday, last seen on October 29 during the peak of India’s festive season buying last year.
Gold in New York, which normally determines price trend in the country, climbed over 1 per cent to touch $1,120 per Ounce in New York on Tuesday. It has an immediate impact on Gold and Silver prices in India that went up by between 1-2%.
Delhi based bullion and foreign currency trader SK Jindal told Rajya Sabha TV: “US Federal Reserve is expected to take a call on interest rate and given the risks to economic growth an interest rate hike is unlikely. It reflects in the hardening of international prices of Gold.”
Prices of another precious metal Silver also firmed up to top the crucial mark of Rs 35,000 per kilogram, an increase of over 2% to reach Rs 35,260 per kg, on increased buying for industrial use and coin making.
However, bullion traders are not expecting a significant increase in the gold prices this season. “Gold prices will be range bound in the coming days,” added SK Jindal.
A weak Indian Rupee also contributed to the rise of Gold prices domestically. During the intraday trade Indian rupee was selling 68 against a dollar due to month end demand by the importers. The Rupee finally closed at 68.05 per dollar, a 29 months low for the currency.
SK Jindal, who deals with currency market, said: “I expect a 1-2% depreciation in Rupee against the Dollar in coming days.”
Gold prices had dropped by over 10% percent in 2015. But the international spot prices of the bullion have gone up by nearly 6% this month.
Hardening of bullion prices was partly due to the latest slide in the crude prices and weak stock markets as investors rush to the yellow metal that is considered a safe haven.
Prices of another important commodity — crude oil — on Wednesday resumed their downward spiral as traders started to book profit after strong gains witnessed during the last weekend.
Oil prices and stock markets have surged last Friday after reports of possible stimulus by two central banks — European Central Bank (ECB) and Japan’s Central Bank to support the global economy. Both main oil contracts — Brent crude and West Texas Intermediate rose by 10 % on a single day on Friday from their 12 year lows but reversed their gains this week but stabilised at $31/ barrel on Wednesday.