Gold prices back on rising trend, silver follows suit

Gold is back on rising trend after Thursday's sharp fall. On MCX, October gold contracts were up 0.44% to ₹37,925 per 10 grams. Earlier, this week, gold prices had hit a new high of ₹38,488. Silver prices also perked up today after Thursday's losses. Silver futures rose 0.8% to ₹43,417. However, in the spot market, gold prices however slipped by ₹140 but still remained above the ₹38,000 mark at ₹38,330 per 10 gram, Press Trust of India reported, citing ll India Sarafa Association. In New Delhi, gold of 99.9% and 99.5% purity fell ₹140 to ₹38,330 and ₹38,160 per 10 gram, respectively.

In global markets, spot gold prices held near the more than six-year peak, rising 0.3% to $1,505.20 an ounce as investors sought the safety of the precious metal amid US-China trade tensions.

Gold prices surged this week as investors scrambled to find safe-havens to park their cash. Earlier this week, both global equity and currency markets went into a tailspin after China let its currency weaken beyond 7 yuan per dollar, a surprise move that investors took as retaliation for US President Donald Trump's announcement of more tariffs on Chinese imports.

Gold prices have also benefited from expectations of further monetary easing from global central banks. Analysts are betting on further cuts from US Federal Reserve, after the US central bank last week cut rate for the first time in a decade. Lower interest rate benefit non-interest yielding asset classes like gold. Reflecting investors appetite for gold, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, have risen 7.3% so far this year.

Gold is traditionally seen as a safe investment in uncertain times. Looser monetary policy drags down bond yields, making non-yielding gold more attractive.

Central banks bought 224.4 tonnes of gold in the second quarter, taking their purchases to 374 tonnes over the first half - the most for any first half since at least 2000 - according to World Gold Council.

Goldman Sachs Group analysts predicted this week that gold prices could climb above $1,600 amid haven demand. UBS Group AG, Citigroup Inc and Bank of America Merrill Lynch analysts are also bullish on gold.

Back in India, latest data show that gold ETF holdings stood steady at ₹5,080 crore, as on July, 2019. Jewellers have reported softening demand as domestic gold prices trade near ₹38,000 per 10 grams. (With Agency Inputs)