India: Gold Price moves up on global cues
New Delhi-India (Dec 5) Standard gold moved up by 1.5% in Zaveri Bazaar here on Saturday following similar move in global markets.
Better than expected US job data removed doubts over interest rate hike as scheduled by the United States Federal Reserves (US Fed) later this month resulting into favourable trade sentiment towards bullion.
Standard gold jumped by Rs 390 to close at Rs 25765 per 10 gram on Saturday. A sudden jump in price, however, deserted buyers from the street with only need based buying continued.
Since, a section of trade has urged the government to reduce interest rate from the existing 10% to 2%, consumers abstained from fresh buying amid expectations of a fresh decline in prices.
In London, gold price jumped by 2.32% to settle at $1,086.84 an oz on Friday as compared to $1,062 an oz the previous day on a better than expected US job data. Gold for delivery in February 2016 on Comex division of the New York Mercantile Exchange was up to $1,062 an oz as against $1,068 before the release of the data.
“With positive data, markets expect nothing worse now. Ideally, gold prices should have gone down with dollar getting stronger. But, gold price moved up due to short covering by traders. We expect gold price to remain firm and to touch $1100 an oz and $1,125 an oz thereafter in short term before taking a downward move further,” said Gnanasekar Thiagarajan, Director, Commtrendz Research.
The US economy added 211,000 jobs last month, better than expected of 201,000 jobs with an employment rate remained unchanged at 5.0%. For October, however, the US government revised employment number upwards to 298,000 from 271,000 announced earlier, making the normalization of US monetary policy from the month’s FOMC meeting a near certainty.
The dollar responded positively and climbed by 0.5% to 1.0894 against the euro.
Silver also followed the trend and jumped by 3.12% to close in London at $14.55 an oz on Friday as against $14.11 an oz the previous day. In local markets too silver moved up by 1.78% to close at Rs 34,900 a kg on Saturday from the level of Rs 34290 a kg on Friday.
“Positive employment data paves the way for an imminent interest rate hike by the US Fed on December 16 which would be positive for dollar and negative for gold. Since dollar is set to strengthen, the price decline in gold would hardly benefit Indian consumers being the rupee weakening against the dollar,” said an analyst.
In local currency, therefore, gold is set to touch Rs 26,000 per 10 grams once again in short term before falling to near recent bottom. Silver would also follow largely gold in India.