Gold Hits Record High for 3rd Consecutive Day

For the third straight session, gold prices in India surged, reaching a record high of ₹78,300 per 10 grams on Friday. This increase comes as jewelers across the nation continue to increase their buying amid strong demand driven by the festive and wedding seasons. The All India Sarafa Association reported that this rise marks an increase of ₹50 from the previous day’s closing price of ₹78,250.

Silver Prices Climb ₹500

Silver also experienced a significant uptick, with rates jumping ₹500 to ₹94,500 per kilogram. The demand for silver surged due to fresh purchases by industrial units and coin makers. On Thursday, silver had closed at ₹94,000 per kilogram. Analysts attribute this rise to growing industrial demand and robust consumer interest in silver coins, especially during the festive period.

Domestic Demand Driving Prices

Traders noted that domestic buying interest among jewelers has been a key factor in the continued upward trend of gold and silver prices. As India enters the busy festival and wedding season, demand for these precious metals is expected to remain high. The festival season, which typically includes Dussehra, Diwali, and weddings, traditionally triggers a spike in gold and silver consumption across the country.

Saumil Gandhi, Senior Analyst of Commodities at HDFC Securities, pointed out that gold prices are benefiting from improved market sentiment, bolstered by expectations of stronger retail demand. China’s recent economic stimulus package is also anticipated to boost the global gold market, with demand from both China and India expected to rise.

Impact of Global Trends

Gold’s upward movement in India is also influenced by global trends. Despite a minor dip in international markets, with Comex gold trading 0.29% lower at USD 2,687.20 per ounce, the precious metal remains well-supported due to its safe-haven appeal. Investors are flocking to gold amid global uncertainties, such as inflation concerns, geopolitical tensions, and the Federal Reserve’s anticipated monetary policy adjustments.

According to Pranav Mer, Vice President of Commodity & Currency Research at JM Financial Services, gold prices have faced some profit booking in the international market, following a stronger-than-expected economic data release in the US. This led to a slight boost in the US dollar, which in turn pressured gold prices globally. Nonetheless, the overall trend remains strong, with ongoing interest from investors in ETFs (exchange-traded funds) and safe-haven seekers.

Federal Reserve’s Influence on Gold

The US Federal Reserve’s monetary policy stance has had a notable impact on gold prices globally. While the Fed remains optimistic about maintaining an aggressive approach to interest rate cuts, the potential for rate cuts has caused fluctuations in the market. Gold prices tend to rise when interest rates fall, as lower rates reduce the opportunity cost of holding non-yielding assets like gold.

Maneesh Sharma, AVP of Commodities & Currencies at Anand Rathi Shares and Stock Brokers, explained that the gold price surge in India reflects a combination of domestic demand and global economic signals. He noted that Thursday’s peak in MCX October futures attracted sellers by the week’s end, leading to some pull back.

Futures and MCX Activity

In the futures trade, the Multi Commodity Exchange (MCX) saw gold contracts for October delivery decline slightly by ₹181, or 0.24%, to ₹75,206 per 10 grams. Similarly, silver contracts for December delivery fell by ₹142, or 0.15%, to ₹92,522 per kilogram. 

This minor downtick comes after strong rallies earlier in the week. According to analysts, these declines are reflective of profit-taking activities among traders, especially as some have reduced their bets on deeper interest rate cuts from the Federal Reserve in the upcoming meeting.

Outlook: Festival Season to Sustain Demand

Looking ahead, market experts predict that gold and silver prices will remain elevated throughout the festive season, supported by strong local demand and global economic conditions. As India’s retail demand for precious metals picks up, particularly during the festival season, traders expect that the trend will continue for the foreseeable future.

Pranav Mer emphasized the role of inflation data and consumer sentiment in shaping the global market’s trajectory, particularly in the US. All eyes are now on the upcoming PCE (personal consumption expenditure) inflation numbers, which could influence the Federal Reserve’s future decisions and, consequently, the direction of gold prices.

With robust demand from both India and China, analysts expect gold and silver prices to remain supported in the near term, even with occasional fluctuations due to global economic factors.