Gold prices eased in Indian markets, tracking similar trend in global markets. On MCX, October gold futures were down 0.40% today to ₹37,792 per 10 grams.
Tracking gold, silver prices also softened in Indian markets with September silver contracts on MCX slipping 0.75% to ₹43,490 per kg. Globally, gold prices slipped 0.3% to $1,508.79 an ounce today as some risk appetite was back in equity markets across the globe after a wild week.
Indicating some rebound in risk appetite, stocks in Asia, including in India, were higher along with US futures. The yield on US 10-year Treasuries also rose, recovering from multi-year lows when an inversion in the yield curve sparked recession worries.
Gold traders will be closing watching US Federal Reserve Chairman Jerome Powell’s address at the Kansas Fed’s annual Jackson Hole gathering on Friday to gauge whether the US central bank will add to its July’s rate cut.
In India, gold futures prices had hit an all-time high of ₹38,666 per 10 grams last week, tracking higher global prices and a slide in the rupee’s value against the US dollar. A depreciation of the US dollar makes gold imports into the country costlier. Gold imports into India also draws a 12.5% import duty.
Record high prices have however hurt demand in India with some jewellers reporting higher trade-in of old jewellery. According to the latest data, gold imports into India fell 42% to $1.71 billion in July.
Fears of a global recession, escalation in US-China trade war and sharp drop in bond yields have lifted gold prices sharply this year. This has however made some analysts cautious.
“Gold has become a crowded trade with majority of hedge funds increasing their long bets in contrast to December 2017 when the very same guys had maximum short positions after which gold started its upward ascent. Also, since gold is in the process of making an intermediate top means that equities have made an intermediate bottom. It is risky from a trading perspective to be long on gold and short on equities. In fact, a reverse would be a far safer play,” said Jimeet Modi, founder and CEO of SAMCO Securities.
Further hurting gold prices today risk sentiment across the globe improved on expectations of some sort of stimulus in China and Germany. White House economic adviser Larry Kudlow said trade deputies from the US and China would speak within 10 days and “if those deputies’ meetings pan out… we are planning to have China come to the USA” to advance negotiations over ending a trade battle that has emerged as a potential risk to global economic growth.
