A Brief Overview
The price of gold has witnessed a surge within a limited time frame as is evident from the fact that gold rates across the globe have consistently hovered near a 3-week high. This scenario was aided by a fall in U.S. Treasury yields.
Examining the Scenario
Tuesday saw the prices of gold and silver get jumbled amid risk-off trade occurring within equity markets across the globe. The Multi Commodity Exchange of India Ltd. (or MCE) witnessed gold futures rise by 0.15 percent which amounted to INR 47,800 resulting in gains being extended to the INR 1,500 mark within a period of 5 days. Silver futures stayed at the flat rate of INR 69,505 per kilogram. The previous session witnessed gold surge to 0.9 percent with a decline in silver amounting to 0.6 percent. Global markets saw gold rates attain a steady streak resulting in a three-week high aided by a drop in U.S. Treasury yields.
Spot gold rose by up to 0.2 percent resulting in it being valued at USD 1,800.42 for an ounce following it almost grazing the USD 1815 mark within a 24-hour time frame. This valuation of the prized metal was also propelled forward by a modicum of weakness experienced by the U.S. dollar.
Other Pertinent Information
It is worth noting that benchmark 10-year US Treasury yield skidded to their lowest value in a time frame amounting to over four months. U.S. interest rates are known for the reactivity they stir within gold prices. The opportunity cost associated with investing in bullion that doesn’t provide yields is therefore unsurprisingly higher. Equally worth pointing out is the fact that the dollar index fell by a smidgen arriving at 92.528 after experiencing a 0.4 percent rise in the previous session.
Asian equity markets which are supportive of gold, weren’t at their peak levels yesterday owing to a risk-off trade occurring within global markets. This scenario was brought forth by a cautious attitude maintained by investors who were awaiting the U.S. Federal Reserve’s final meeting in order to gain insight into and hints pertaining to policy outlook.
Investors and traders hoped to get data pertaining to US employment during the week such that they could assess the FED stance at the Federal Open Market Committee meeting. Unemployment rates in the US have risen by 5.9 percent in June which is in contrast to the anticipated 5.6 percent rate.
Bullion prices have been supported owing to the incline in the number of cases pertaining to the Delta variant of COVID-19 arising in the U.K. as well as other parts of the world which have resulted in partial lockdowns. These bullion prices have been able to rise above their recent lows brought on by speculation related to the FED tapering signals interspersed with fear of inflation.
The dollar was able to successfully rally against a slew of currencies due to anticipations pertaining to a hawkish attitude moving forward.
When considering precious metals such as gold it is important to note that silver remained at a consistent price and was valued at USD 26.14 per ounce.
The Multi Commodity Exchange of India, which operates under the jurisdiction of the Ministry of Finance witnessed both gold and silver trade at a higher price point. The price of gold ranged from INR 44,990 in Chennai to INR 46920 in Kolkata per 10 grams of 22 carats respectively. Silver per kilogram ranged from INR 70,300 in cities like New Delhi, Mumbai, and Jaipur in comparison to a valuation of INR 74,900 in Chennai.