Gold at 12-month high on geopolitical tensions

In the international market, gold made a high of $1,910 per ounce in the morning session

Chennai: Gold prices on Monday touched a 12-month high in the domestic market and eight-month high in the international market as geo-political tensions raised the demand for the safe haven asset.

In the international market, gold made a high of $1,910 per ounce in the morning session. The price movement was restricted as the US market was closed on Monday. The bullion market had seen a similar level last in May 2021.

In the Indian futures market, gold soared to Rs 50,100 per 10 gm, the highest level since January 2021, said Ajay Kedia, MD, Kedia Commodities.
Spot gold, however, fell by Rs 212 to Rs 49,827 per 10 gram in the Delhi market, aided by rupee appreciation.

According to him, price movement was restricted by the US market closure. "While inflation has been supporting the gold prices, currently the market has been reacting to the geo-political crisis. The market is no longer concerned about the US Fed rate hike," he said.

"Underpinning its status as a safe haven while risk assets remained under pressure, prices climbed back towards $1,900 per ounce. Safe-haven seekers have also started to return to the market," said Carsten Menke, head-next generation research, Julius Baer.

"Geopolitical tensions typically do not provide lasting upside to gold prices unless there is a sustained negative impact for the economy and/or financial markets. With the recent rise, we believe gold is already partly priced in a military escalation, even though prices will likely spike should it actually happen," added Menke.

However, prices are expected to move up even with the support of factors like inflation. "After last year's consolidation, we expect prices to move towards $1,970 - $1,980 levels by June. This could take Indian gold prices closer to Rs 54,000," said Kedia.

Next Story