New Delhi: Gold prices today surged by 280 to cross 34,000 mark amid a global rally and strong buying from domestic jewellers. The prices of yellow metal rose to 34,020 per ten gram. Tracking gold, silver too increased by 710 to 39,060 per kg on increased offtake by industrial units and coin makers.

The latest trigger for global rally in gold prices is US Federal Reserve’s hint that there could be possible interest rate cuts later this year. The US central bank on Wednesday signalled interest rate cuts beginning as early as July, saying it is ready to battle growing global and domestic economic risks as it took stock of rising trade tensions and growing concerns about weak inflation.

Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies. The US dollar weakened while 10-year US yields dropped below 2% for the first time since November 2016 as expectations grow that major central banks will ease policy.

In Singapore, bullion for immediate delivery today jumped as much as 2.5% to $1,394.11 an ounce, the highest since September 2013 while futures in New York also to near $1,400 an ounce, also the highest since 2013.

Spot gold may gain more to $1,404 per ounce, as it has cleared a resistance at $1,371, according to Reuters technical analyst Wang Tao.

"Gold has been trading on a positive note for the last four weeks on growing geopolitical concerns and weak economic releases from U.S. and China that lifted its safe haven appeal. Weak global growth forecast amid growing trade war tensions also stoked investors towards the yellow metal," said Hareesh V, head of commodity research at Geojit Financial Services.

Gold prices have also been supported from buying by global central banks. "Gold since the start of 2019 has had a lack lusture performance, but surprisingly in the last one month we have seen a good run up in gold prices. It seems that in the phase of consolidation some major buying has taken place and one of the purchasers have been central banks. The latest report by WGC showed that some central banks in Asia including China, India and Kazakhstan and from Europe such as Russia, Poland and Hungary have begun accumulating gold, although in minimal quantity, and that is starting to reflect on prices," said Kishore Narne, head of commodity and currency at Motilal Oswal Financial Services.

Gold has rallied since late May as investors seek havens amid slowing global growth due to the fallout from the US-China trade dispute and as central banks globally adopt a more dovish tone.

Analysts are closely watching the progress of trade talks between US and China. China and the US earlier this week said they were reviving talks ahead of a meeting next week between Presidents Donald Trump and Xi Jinping, cheering financial markets on hopes that it may ease intensifying trade frictions.

A trade deal between US and China might shift the investors towards riskier assets, denting the appeal for gold, domestic brokerage Angel Broking said in a note. (With Agency Inputs)

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