Gold prices rose on Monday in India, according to data from the Multi Commodity Exchange of India (MCX).
The price of Gold stood at 60,784 Indian rupees (INR) per 10 grams, 755 INR more than the 60,029 INR it cost on Sunday.
Regarding futures contracts, Gold prices fell to INR 60,655 per 10 grams from INR 60,722 per 10 grams.
Prices for Silver futures contracts fell to INR 72,794 per kg from INR 73,360 per kg.
| Major cities of India | Gold Prices |
|---|---|
| Ahmedabad | 62,895 |
| Bombay | 62,760 |
| New Delhi | 62,885 |
| Chennai | 62,890 |
| Calcutta | 62,880 |
Drivers of world markets: Gold price on Comex struggles amid optimism over China stimulus
- The Comex gold price is struggling, despite strong expectations that the Federal Reserve (Fed) will not raise interest rates amid signs that the nightmare of high prices is over.
- Last week’s US CPI report indicated that consumer inflation was cooling faster than expected, while last Thursday’s US jobless claims pointed to a cooling market labor.
- Markets appear convinced that the Fed will keep rates unchanged at its December 2023 policy meeting and are pricing in a rate cut by the end of 2024 at almost 100 basis points.
- The reversal in expectations about the Fed’s future monetary policy dragged the benchmark 10-year U.S. Treasury yield to two-month lows on Friday and benefited non-yielding metals.
- The dollar weakens near its lowest level since September and is seen as another factor lending support to XAU/USD ahead of Tuesday’s FOMC minutes.
- The escalation of violence between Israel and Hamas has sparked concerns about its possible impact on the global economy and, in the worst case, could push it into recession.
- Israel and the United States rejected reports of a possible breakthrough in negotiations with Hamas to free some of the 240 Gaza hostages in exchange for a five-day pause in the war.
- The People’s Bank of China kept its Lending Prime Rate (LPR) near record lows, as widely expected, and also injected some 80 billion yuan of liquidity into the markets.
- Chinese regulators have pledged to provide more policy support to the beleaguered real estate sector, boosting investor confidence and limiting the safe haven XAU/USD.
Frequently asked questions about Gold
Why invest in Gold?
Gold has played a fundamental role in human history, as it has been widely used as a store of value and medium of exchange. Today, apart from its brilliance and use for jewelry, the precious metal is considered a safe haven asset, meaning it is considered a good investment in turbulent times. Gold is also considered a hedge against inflation and currency depreciation, since it does not depend on any specific issuer or government.
Who buys more Gold?
Central banks are the largest holders of Gold. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and purchase Gold to improve the perception of strength of the economy and currency. High Gold reserves can be a source of confidence for the solvency of a country. Central banks added 1,136 tons of gold worth about $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the largest annual purchase since records exist. Central banks in emerging economies such as China, India and Turkey are rapidly increasing their gold reserves.
What correlation does Gold have with other assets?
Gold has an inverse correlation with the US Dollar and US Treasuries, which are the main reserve and safe haven assets. When the Dollar depreciates, the price of Gold tends to rise, allowing investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken the price of Gold, while sell-offs in riskier markets tend to favor the precious metal.
What does the price of Gold depend on?
The price of Gold can move due to a wide range of factors. Geopolitical instability or fear of a deep recession can cause the price of Gold to rise rapidly due to its status as a safe haven asset. As a non-yielding asset, the price of Gold tends to rise when interest rates fall, while rising money prices tend to weigh down the yellow metal. Still, most of the moves depend on how the US Dollar (USD) performs, as the asset is traded in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold in check, while a weaker Dollar is likely to push up Gold prices.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
