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Gold prices in India continued their recent upward trend while silver also extended gains. On MCX, gold futures rose 0.3% to five-month high of 54,006 per 10 gram, buoyed by firm global rates. Silver futures jumped 0.8% to 66,970 per kg. In global markets, gold rose to a five-month high as Chinese cities relaxed COVID-19 restrictions over the weekend. Spot gold gained past $1,800 per ounce, also supported by a pullback in US dollar. China is the biggest consumer of gold and scaling back of restrictions mean that gold demand will increase in the region, say analysts. 

The dollar index today was down near five-month lows, making greenback-priced bullion cheaper for overseas buyers.

Data released on Friday showed US employers hired more workers than expected in November and increased wages. Despite the strong jobs data, many market participants expect the Fed to slow their pace of tightening.

Gold has breached the $1800 per ounce mark on a weak dollar. Markets dismissed the solid US payroll data. Market is not convinced about Fed being able to hike rates beyond 5% in this hike cycle. 2-year yield had risen to 4.40% from 4.18% immediately post the jobs report but is currently trading around 4.30%. 10y yield is currently at 3.52%. Dollar had strengthened post the jobs report but gave up all the gains subsequently," IFA Global said in a note.

The possibility of a slowing down the pace of monetary tightening has lifted gold rates over the past one month. Lower interest rates tend to be beneficial for gold as it reduces the opportunity cost of holding the non-yielding asset. In India, gold is up about 3,000 over the past one month. 

Gold prices has picked up in price action massively, rising by nearly $60/oz in the last two weeks alone to trade around $1800 levels. The rise in prices is largely due to the dovish commentary by the Fed on its monetary policy. Looking ahead to the month of December, the metal looks set to extend recent gains, due to a combination of softer inflation prints, weaker economic data points, and a 90% chance of the Fed hiking interest rates by 50 bps on December 14th," said Colin Shah, Founder & MD, Kama Jewelry.

Jateen Trivedi, VP Research Analyst at LKP Securities, says the trend for gold looks positive as long as dollar index weakness continues below $107. (With Agency Inputs)

 

 

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