Home / Markets / Commodities /  Gold discounts in India go up as prices remain near 9-month highs

As gold prices rose to multi-month highs this week in India, dealers offered higher discounts amid sluggish demand despite the marriage season, Reuters reported. Dealers in India offered discount of of up to $20 an ounce over official domestic prices, versus last week's $18 discounts, according to the report. Gold rates this week rose to 9-month of 54,348 per 10 gram. Today, on MCX, futures were today 0.2% higher at 54,156 per 10 gram. 

Despite the marriage season being underway, the report said, retail demand in India remains sluggish as prices have surged over the past two months, from around 49,000 to 54,300.  

“Over the last two months, gold prices have found support from the cool-off seen in the US bond yields, which are now hovering around 2.8% odd levels. Earlier during mid-Jun’22, it went up to 3.48% levels on an expectation of aggressive rate hikes. Based on the current macroeconomic development, gold will continue to be a preferred asset class until uncertainties over the Russia-Ukraine conflict fades and will continue to attract investments as a proven hedge against other asset classes. We continue our neutral stance on gold and recommend a ‘Buy-on-Dips’ strategy," Axis Securities said in a note. 

In India, gold rates are up about 5,000 per 10 gram over last two months, tracking a global rally in precious metals as US bond yields pulled back on expectations of slowing pace of rate hikes by central banks. 

In global markets, gold rates today were up 0.2% at $1,793.20 per ounce as investors remained cautious ahead of US Producer Price Index (PPI) inflation data. Besides that the Fed and the European Central Bank meetings are due next week. The two-day Fed meeting ends on December 14. 

“The major factor supporting gold is the expectation of a lower rate hike pace by the Fed. However, the Fed has indicated that the rate hike might go on for longer than previously expected. The US PPI for November will give further cues on the inflation situation in the US. PPI data will be followed by CPI and the last FOMC meeting for 2022 in the coming week. On the price front COMEX gold has registered a double top near $1825/oz. So, until the said resistance hold, we expect a range bound move in gold between $1773/oz to $1820/oz," said Ravindra Rao, Head Commodity Research, Kotak Securities.

Lower interest rates tend to be beneficial for bullion as they decrease the opportunity cost of holding the non-yielding asset. Elsewhere, spot silver was flat at $23.06 per ounce, platinum eased 0.2% to $1,003.75. (With Agency Inputs)



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