Gold prices rise to over 6-year high: 6 things to know
Gold prices today rose for the third day amid weak equity markets. In three days, gold prices have gone up by over Rs 400.
New Delhi: Gold prices today extended their rally, rising by another Rs 125 to trade at an over six-year high of Rs 32,625 per 10 gm - the highest level since November 29, 2012, when the precious metal had closed at Rs 32,940 per 10 gm. This is the third day of gains for gold, which has risen over Rs 400 per 10 gm since October 23. Higher global prices, a pick-up in festive and wedding season demand by local jewellers and a weakening rupee lifted gold prices.
6 things to know about the gold price rise today:
1) In Delhi, gold of 99.99 and 99.5 per cent purity rallied by Rs 125 each to Rs 32,625 and Rs 32,475 per 10 gm, respectively. Sovereign gold, however, traded steady at Rs 24,800 per piece of 8 gm.
2) Weak domestic equity markets also boosted the appeal of gold. The Sensex fell nearly 350 points today amid a global rout in equities. A weak rupee, which increases the import price of the metal, also supported gold prices. The rupee fell to 73.24 a dollar against Wednesday’s price of 73.16.
3) Silver, however, remained weak and fell by Rs 130 to Rs 39,600 per kg due to slackened industrial demand. Silver ready extended its weakness by prices falling by another Rs 130 to Rs 39,600 per kg. Silver coins, however, remained unaltered at Rs 76,000 for buying and Rs 77,000 for selling of 100 pieces.
4) In global markets, gold prices today edged higher closer to more than three-month highs as a rout in global equities boosted the precious metal’s safe-haven appeal. Spot gold was up 0.2% at $1,235.41 an oz, not far off Tuesday’s $1,239.68, the highest since July 17. Some analysts see more upside potential in gold prices. “After the massive sell-off in global equities, investors are looking for a safe-haven shelter. We see more upside potential for gold prices, and if it continues to move up and reaches the $1,245 level, it could trigger a series of short covers, pushing prices to $1,255,” said Benjamin Lu, a commodities analyst with Phillip Futures.
5) Global gold prices are up 6% since their mid-August lows amid concerns ranging from the US-China trade dispute to Italy’s budget woes and the Brexit uncertainty and most recently the global equity selloff and US-Saudi tensions. Dollar-denominated gold is seen as an alternative investment during times of political and financial uncertainty.
6) The losses in global equity markets also pushed up inflows into gold-backed financial instruments. Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.24% to 24,101,732.54 oz on Wednesday, the highest since early September. Bullion investors will look for cues from European Central Bank (ECB) monetary policy meeting, due later today.
(With Agency Inputs)
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