Gold Prices Surge Amid Market Trends

Gold prices have recently experienced a significant increase, reaching a two-month high. On Thursday, the price of gold rose by Rs 500, settling at Rs 81,300 per 10 grams in Delhi’s bullion market. This surge is attributed to fresh buying from jewellers and retailers, coupled with a weakened rupee. The All India Sarafa Association reported that the previous day’s closing price was Rs 80,800 per 10 grams. The rise in gold prices is not an isolated event; silver also saw a notable increase, climbing Rs 2,300 to reach Rs 94,000 per kilogram.

Factors Driving Gold Prices Higher

The recent rally in gold prices can be linked to several key factors. One of the primary drivers is the depreciation of the Indian rupee. On Thursday, the rupee fell by 16 paise, closing at 86.56 against the US dollar. This decline is influenced by a strong dollar, high crude oil prices, and ongoing foreign fund outflows. Jateen Trivedi, Vice President of Research at LKP Securities, emphasized that the weakening rupee has played a significant role in pushing gold prices above Rs 79,000 on the Multi Commodity Exchange (MCX).

Additionally, global market trends have contributed to the bullish sentiment surrounding gold. Analysts noted that gold contracts for February delivery on the MCX rose by Rs 297, or 0.38%, to Rs 79,007 per 10 grams. Silver contracts for March delivery also saw an increase, appreciating by Rs 654, or 0.7%, to reach Rs 93,510 per kilogram. The combination of local buying and international market dynamics has created a favorable environment for gold and silver prices.

Global Market Influences

Globally, gold prices have also been buoyed by favorable economic indicators. Comex gold futures increased by $19.70 per ounce, or 0.72%, reaching $2,737.50 per ounce. This rise is largely attributed to softer-than-expected US core Consumer Price Index (CPI) data, which has raised hopes for further interest rate cuts by the Federal Reserve. Trivedi pointed out that the inflation reading has strengthened gold’s momentum, as market expectations lean towards continued rate cuts.

In the silver market, Comex silver futures gained 1.28%, trading at $31.94 per ounce during Asian market hours. The global economic landscape, particularly in the United States, plays a crucial role in shaping the prices of precious metals. As inflationary pressures mount and the prospect of rate cuts looms, both gold and silver are regaining their status as safe-haven assets.

Future Outlook for Gold and Silver

Looking ahead, experts remain optimistic about the future of gold prices. Renisha Chainani, Head of Research at Augmont, highlighted potential economic policies under a future Trump administration, such as tax cuts and higher tariffs, which could further stoke inflation and drive gold prices higher. Saumil Gandhi from HDFC Securities also pointed out that upcoming US macroeconomic data, including retail sales and the Philadelphia Fed Manufacturing Index, will significantly influence bullion prices.

As inflationary pressures continue to build and the possibility of rate cuts becomes more pronounced, gold appears poised to maintain its appeal as a safe haven. The parallel surge in silver prices indicates a broader optimism in the bullion market. Investors and market watchers will closely monitor these developments, as they could shape the trajectory of gold and silver prices in the coming months.


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