Home / Markets / Commodities /  Gold rates in India move into discount for first time in a month

In India, prices in India traded at a discount to official prices for the first time in four weeks. Gold dealers in India were last week offering a discount of up to $2.5 an ounce over official domestic prices down from the last week's premium of $3, Reuters reported. Gold rates in India include 15% import duty and 3% GST. Gold struggled in Indian markets today as international rates hovered near two and a half year lows. On MCX, gold futures edged lower to near six-month lows of 49,295 per 10 gram, before paring some losses. Silver futures however fell sharply to 55714 per kg, down about 1%. 

Despite the risk-off sentiment in global markets, gold prices has taken a beating, pulled down by a firmer US dollar and aggressive stance on interest rates to tame inflation. In global markets, gold fell 0.3% to $1,637.85 per ounce. Spot silver shed 1.6% to $18.54 per ounce, having earlier fallen to its lowest in more than two weeks.

The dollar index, which gauges the greenback versus six peers, scaled a fresh peak since 2002 boosted by a plunge in British sterling. The US central bank, Bank of England and a number of other major central banks last week raised interest rates last week, triggering concerns over its impact on growth. 

Higher US interest rates dull the zero-yielding bullion's appeal while bolstering the dollar in which gold is priced. Despite the recent dip in gold rates, EGF flows remained subdued. Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, fell to 30,454,517 ounces on Friday, its lowest since March 2020. 

Ravindra Rao, VP- Head Commodity Research at Kotak Securities, said: “COMEX gold slipped below $1650/oz, lowest since April 2020 as stronger dollar and higher treasury yields dampened demand for the yellow metal. The US 10-year yield has come close to 2010 high in reaction to Fed’s aggressive monetary tightening stance. The US dollar is trading strong this morning however we need to see whether it sustains above the resistance zone of 110.50-111 for this week. Gold has moved below the crucial support of $1670 and is sustaining below the same. Although it might attract buying at lower levels a sustained rise is unlikely until the US dollar reverses from the top." (With Agency Inputs)

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