Gold prices in India ended the month on a positive note. On MCX, gold futures contracts rose 0.80% on Friday to regain the ₹38,000 mark per 10 gram. This was the second day of gains after a seven-day fall that has pushed down gold prices in India by about ₹2,000 per 10 gram from its September highs of about ₹40,000. Silver rates also moved higher on Friday with prices on MCX closing 0.54% higher at ₹44,398.
In global markets, gold prices fell over 3% in November, with investors seeking clarity on US-China trade talks. Markets are awaiting further developments on how US-China trade talks would proceed after Beijing said it would take retaliatory measures against Washington for passing a law in support of Hong Kong protestors. Gold prices have moved in tandem with the news flow about the progress of US-China talks.
Diminished expectations of further interest rate cuts by the Fed has weighed on gold prices.
Hoping that a US-China trade deal would be signed soon, investors have pushed equities to record highs, dampening demand for safe haven assets such as gold.
Abhishek Bansal, chairman of ABans Group of Companies, says the market is anticipating a "phase-one" trade deal between the U.S. and China before the end of 2019, and this optimism led to a drop in gold prices in November.
Gold prices have been stuck in the $1450-1480/ounce range and may continue in this zone unless there is more clarity on US-China trade issue and Fed’s monetary policy, says Kotak Securities in a recent note. Analysts expect gold prices to remain choppy in near term, depending on the news flow about US-China trade deal.
Despite the recent fall, gold prices in global markets are up over 13% this year and still on track for their best year since 2010, buoyed by uncertainties surrounding the long-drawn trade war and global growth fears. In India, gold prices are up about 20% year to date, further lifted by a depreciation in the rupee against the US dollar and an import duty hike.
Gold is generally considered a hedge during times of financial or political uncertainty.
Back in India, the government will make hallmarking for gold jewellery mandatory from January 15, 2021, to ensure quality, Union Consumer Affairs Minister Ram Vilas Paswan said this week. on Friday, a move that could help tackle quality concerns and boost demand in the world's second-biggest gold market. However, a one-year period will be provided for implementation of this decision to enable jewellers clear their existing stock. (With Agency Inputs)