Silver Spot Support Zone $28 — $ 27.48, Target Price $29 — 29.80, September silver futures prices on MCX rose 0.4% to ₹69,135 per kg. In the previous session gold had surged ₹500 per 10 gram while silver had gained about ₹1,000 per kg. Gold prices in India had hit a record high of ₹56,200 on August 7 and since then prices have been volatile in tandem with movement in global rates.
Gold and silver prices edged higher today in Indian markets, following positive trend in global rates. On MCX, October gold futures rose 0.1% to ₹51504 per 10 gram to extend gains to the second day.
In global markets, gold prices today hit a two-week high, supported by a weak US dollar. Silver spot gold was up 0.4% at $1,971.68 per ounce, after hitting $1,976 in early trade – its highest since August 19th. US gold futures rose 0.4% to $1,982.50. The dollar index fell 0.2% and was on track for its fourth consecutive monthly decline.
Among other precious metals, silver spot jumped 1.7% to $27.94 per ounce while platinum rose 0.4% to $935.06.
“MCX gold appreciated as demand was boosted by a weaker dollar and the U.S. Fed Reserve’s new policy framework suggested that interest rates would stay low for some time.
Meanwhile, China’s factory activity expanded at a slightly slower pace in August. Japan’s factory output rose for a second straight month in July The investment demand has been subdued for a while. In the absence of any major economic data in intraday, the sentiment will be positive due to weak greenback,” said Jigar Trivedi, Research Analyst- Commodities Fundamental, Anand Rathi Shares & Stock Brokers.
Gold was also supported by the US Federal Reserve’s new policy framework which suggested that interest rates would remain low for some time, say analysts. Last week, Fed Chairman Jerome Powell said the central bank would adopt an average inflation target, meaning rates are likely to stay low for longer.
Lower interest rates weigh on the dollar and also decrease the opportunity cost of decrease the opportunity cost of holding non-yielding gold. Similarly, a weak US dollar makes gold cheaper for investors holding other currencies.
“US Federal Reserve’s announcement of change in policy framework and new approach to inflation raised expectation that the central bank would keep interest rates ultra-low to support the economy as long as its needed. Gold and silver gained while weakening dollar also supported the price sentiments,” Geojit Financial Services said in a note.
Gold prices are up about 30% so far this year in global markets as investors bet that governments and central banks policies would stay super stimulatory for a longer period as coronavirus cases in the world surged past 25 million on Sunday.
In India, the latest tranche of sovereign gold bonds opens for subscription today. The Reserve Bank of India, which issues the bond on behalf of the government, has fixed the issue price at 5,117 per gram. Those applying online and making payment online get a discount of ₹50 per gram.
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On the physical side, dealers in India offered the highest discounts on gold in five months last week as a dip in domestic prices failed to revive demand. Gold prices in India include 12.5% import duty and 3% GST.
