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Gold discounts in India widened this week amid a winding up of wedding season and a rise in prices from recent lows. Dealers in India offered a discount of up to $9 an ounce over official domestic prices this week, higher than last week's $5 discount, according to news agency Reuters. Gold rates in India include 10.75% import and 3% GST.  As wedding season is coming to an end, retail demand this month is likely to be muted. 

On Friday, gold rates in India (MCX futures) fell 0.6% to settle at 50,984 per 10 gram.  Despite the correction, gold is up over 1,000 from this May's low of 49,700.

In global markets, gold fell sharply on Friday as better-than-expected US jobs data raised concerns of aggressive monetary policy tightening. The US dollar too gained strength.  Spot gold fell 1% to $1,848.67 per ounce.

Data released on Friday showed US May nonfarm payrolls rose 390,000 compared to Bloomberg survey estimates of 318,000. Meanwhile, the unemployment rate remained unchanged at 3.6% in the month.

Higher US interest rates increase the opportunity cost of holding gold, which bears no interest, while boosting the dollar in which bullion is priced.

At the same time, “gold is also supported by safe haven buying amid increasing challenges to global economy, persistent inflation and geopolitical tensions. Increased volatility in energy prices has added to inflation concerns," Kotak Securities said in a note.  “ETF flows however shows that investors are using higher price to exit the market."

Trend in US dollar, bond yields and equities may continue to affect gold and silver and focus will be on economic data, central bank comments and development relating to virus spread and Russia-Ukraine war, the brokerage said. 

The US Federal Reserve is expected to raise rates by 50 basis points at its next two meetings.

On silver, Kotak Securities said, the “outlook for industrial metals have improved with China lifting virus related restrictions but growth concerns persist. ETF outflows show weaker investor interest."

US stocks turned sharply lower on Friday after May hiring data topped expectations, suggesting the labor market remains robust enough for the Fed to raise rates quickly as it battles runaway price gains. (With Agency Inputs)

 

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