MCX Gold Future Prices has also benefitted from disappointing US economic data which strengthens the case that Fed may keep interest rate low,” Kotak Securities said in a note.
Gold prices in India continued to rise today, extending gains to the third day. On MCX, gold future prices rose 0.32% to over two-month high of ₹38,763 per 10 gram. Silver rates surged 1% to ₹46,935 per kg.
In global markets, gold prices today rose 0.3% to two-month high of $1,503 per ounce. “After weeks of rangebound movement, gold broke past the key $1480/ounce level and this has resulted in extended gains till $1500/ounce.
Gold has also benefitted from geopolitical tensions, say analysts. Earlier this month, North Korea warned of a possible “Christmas gift” for Washington after its leader Kim Jong Un gave the US until the end of the year to propose new concessions in talks over his country’s nuclear arsenal and reducing tensions between the adversaries.
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Investment demand for gold also saw an uptick. Gold holdings with SPDR ETF, the world’s biggest gold-backed exchange traded fund, rose by 2.92 tonnes to 888.85 tonnes, the highest since December 3, Kotak said.
However, weighing on price are signs of progress in US-China trade deal. US President Donald Trump on Tuesday said there will be a signing ceremony with the Chinese President Xi Jinping to sign the first phase of the trade deal agreed to this month.
Gold has rallied sharply in last few sessions. But the gains have come amid holiday thin trade and despite persistent strength in global equity markets. “So the momentum may not continue for long,” Kotak Securities said. With gold breaching the $1500/ounce mark, there is a possibility of price rising till $1515/ounce, says Kotak Securities.
Silver has rallied sharply in last few sessions, tracking gains in gold and a break above $18/ounce may lead to extended gains, say analysts. However, the rally may falter soon unless ETF investors show some buying interest, says Kotak Securities.
Gold prices are up 17% this year and are on track for their best showing since 2010, boosted by the safe-haven demand of the metal amid the trade spat between China and the US. In early September, gold prices had hit a six-year high of $1,557.11 an ounce.
In India, year-to-date gains in gold have been higher due to the rupee’s depreciation against the US dollar and hike in import duty.
For the next year, the outlook for gold remains mixed. JPMorgan Chase, expecting a pick up in global economy, advised shorting gold. On the other hand, Goldman Sachs Group Inc. and UBS Group AG see prices climbing to $1,600 an ounce.
