Gold prices surge to near one-month high after big gain, silver rates jump

Gold dealers in India charged premiums of up to $2 an ounce over official domestic prices, unchanged from previous week, news agency Reuters reported. Gold rates in India include 10.75% import duty and 3% GST.  On Friday, gold futures on MCX surged nearly ₹500 to settle at near one-month high of ₹47487 per 10 gram while silver jumped 3% or ₹1,900 to ₹65,154 per kg. 

In global markets, gold rates jumped to a seven-week high on Friday after less-than-expected job additions in the US eased concerns that the Federal Reserve will soon pare back stimulus. Physical gold demand in India remained muted as a rebound in domestic prices kept buyers at bay but dealers pinned their hopes on an upcoming festival season.

Spot gold rose over 1% on Friday to $1,830 while spot silver jumped 3.6%. Data released on Friday showed US nonfarm payrolls increased 235,000 in August, well below economists’ forecasts. The dollar index fell to 92.132, boosting the appeal of precious metals for investors holding other currencies.

Gold has has struggled this year amid a global economic rebound from the pandemic, which has raised the prospect of central banks paring their massive monetary stimulus. But economists say that the disappointing jobs data puts any decision on tapering off the table when Fed meets on September 21-22.

Last week, Fed chairperson Jerome Powell said last week a reduction in monthly bond purchases could begin this year.

ETF outflows however showed weaker investor interest. Gold holdings with SPDR ETF, the world's biggest gold backed exchange traded fund, fell by 1.7 tonnes to 998.52 tonnes, lowest since April 2020, according to Kotak Securities. 

The general bias for gold however remains positive amid increasing challenges to global economy and increasing geopolitical tensions, says Kotak Securities. 

Trend in US dollar, equities, bond yields may continue to affect gold and silver and focus will be on economic data from major economies, central bank comments and development relating to virus situation, China’s regulatory crackdown and tensions in Afghanistan, the brokerage added. (With Agency Inputs)