Gold prices on MCX ended at  ₹38,090 per 10 gram
Gold prices on MCX ended at 38,090 per 10 gram

Gold prices fall, down 1,900 per 10 gram from last month's record highs

  • Gold rates may remain choppy in the near term, say analysts
  • Gold bonds will open for subscription next week at 3,785 per gram to those who apply online

Gold prices in India continued their choppy movement this week. On Friday, gold futures contracts on MCX ended 106 or 0.28 % lower at 38,090 per 10 gram. Silver also showed a similar trend, ending 0.1% lower at 45,500 per kg on MCX. In global markets, gold prices ended 0.32% lower at $1,493 per ounce and silver 0.24% lower at $17.57 an ounce.

With gold prices now down about 1,900 per 10 gram from last month's record highs of about 40,000, jewellers hope that retail buying will see a pick up ahead of Dhanteras and Diwali. They have rolled out promotional offers to increase footfall and drive sales.

Gold prices have remained range-bound over past few days with rise in global equity indices. On the downside, gold has been supported by global growth worries. Uncertainty about major issues like Brexit and US-China trade deal has also led to volatility in currency market, thus impacting the price of dollar-denominated gold.

Analysts at Kotak Securities say that gold may continue to see choppy trade in near term as market reacts to economic data, trade related and geopolitical development. But growth worries and geopolitical tensions will lend support to gold on the downside, they say.

Silver may also witness choppy trade as risk sentiment may result in mixed trade in gold and industrial metals, say analysts. "We expect buying interest to emerge at lower levels as global growth worries may keep gold price supported," say analysts at Kotak Securities.

Another tranche of gold bonds will open for subscription next week. The 2019-20 Series VI of sovereign gold bonds will open from subscription between October 21 and 25, with issuance on October 30. The minimum investment in these gold bonds is one gram. RBI has fixed issue price of these bonds at 3,835 per gram of gold, with discount of 50 per gram to those investors applying online and the payment against the application is made through digital mode. For such investors, the issue price of gold bond will be 3,785 per gram of gold.

The issue price of the gold is based on the simple average closing price published by the India Bullion and Jewellers Association for gold of 999 purity of the last three business days of the week preceding the subscription period (October 16 – October 18, 2019).

According to calendar issued by Reserve Bank, gold bonds will open for subscription again in December, January, February and March this fiscal. (With Agency Inputs)