Business Other News 06 Aug 2019 Gold crosses Rs 37,0 ...

Gold crosses Rs 37,000 mark, may go up further

DECCAN CHRONICLE. | SANGEETHA G
Published Aug 6, 2019, 3:04 am IST
Updated Aug 6, 2019, 3:41 am IST
MCX gold rallied to uncharted territory on escalating trade tensions between the United States and China.
w  While gold moved to `37,050 per 10 gm on the Multi Commodity Exchange, in the New Delhi spot market, prices just shied away from that level at `36,970
 w While gold moved to `37,050 per 10 gm on the Multi Commodity Exchange, in the New Delhi spot market, prices just shied away from that level at `36,970

Chennai: Gold prices gained Rs 775 per 10 gm in the Indian market to touch a fresh high of Rs 37,050 as the international prices continued their upward momentum amidst weakness in rupee. Considering the escalating trade war and US Fed’s dovish stance, analysts have upwardly revised the outlook for the yellow metal for the year.

While gold moved above Rs 37,000 per 10 gm on the Multi Commodity Exchange, in the New Delhi spot market, prices just shied short of that level at Rs 36,970. But the spot market also made a gain of over Rs 600 per 10 gm on Monday.

 

The domestic market has been moving in tandem with the international market, which saw prices touching $1,460 per ounce from the previous day’s close of $1,443. Prices have moved $60 in the past three straight sessions. On July 1, gold was hovering around $1,400 levels.

“The positive momentum in the metal has been building since the market started speculating about US Federal Reserve taking a dovish stance. Last week, the Fed cut interest rates and is expected to go for another two rounds of rate cuts,” said Himanshu Gupta, Vice President and Head of Commodities and Currencies Research, Globe Capital.

However, on Monday the escalation of the trade war between the two largest economies—the US and China—and the trade war entering the next phase of currency war moved the bullion market.  

“MCX gold rallied to uncharted territory on escalating trade tensions between the United States and China. Gold found support as China yuan tumbled beyond 7 yuan per dollar for the first time in more than 10 years in a retaliatory move against US President Donald Trump's decision to impose an additional 10 per cent tariff on $300 billion worth of Chinese imports,’ said Abhishek Bansal, Chair-man, ABans Group.

Even, the Dollar Index further weakened on Monday amidst indications that the US adminstration preferred weakness in the dollar to support exports. Asian currencies joined yuan and the rupee weakened to 70.73 on Monday.

“The rupee’s weakness further supported gold in the domestic market. The rupee has been on a stronger note for the past few months. After yuan devaluation, the rupee might also be allowed to trade around 71-72 levels,’ said Gupta.

Most analysts have revised the target levels for gold, taking the rupee’s weakness into account. “In the immediate short-term, gold might move towards $1,475-$1,485 levels. Though some profit booking cannot be dismissed, the trend is positive for gold. By the first quarter of next year gold might see $1,600-$1,620 levels. In the Indian market, this will help gold move up to Rs 39,000 this year and Rs 41,000 by the first quarter of next year,” said Gupta.

According to Jateen Trivedi, Technical Research Analyst at Bon-anza Portfolio, Rs 38,000 looked achievable by Diwali and Rs 40,000 before year-end.

Hedge funds and money managers also have raised bullish positions in gold.

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