Spot gold hits Rs 28k-mark after single biggest daily gain in the year
New Delhi-India (Feb 9) Silver prices also moved up Rs 1,170 to cross Rs 37,000 mark and touched Rs 37,220 per kg. Reacting to late night movement in the international market, spot gold prices in the Indian market on Tuesday opened Rs 710 up, touching Rs 28,000 per 10 gm, a level that was seen a year back.
Gold prices closed at Rs 27,875 on Monday and opened Rs 28,585 on Tuesday– making the biggest single day gain in the year. Silver prices moved up Rs 1,170 to cross Rs 37,000 mark and touched Rs 37,220 per kg.
“Prices opened high following yesterday’s global cues, but were trading around the same levels today till the spot market closed in the afternoon,” said Surender Jain, vice president, All India Sarafa Association.
In the international market on Monday, gold prices rallied from $1,173 per ounce to hit a high of $1,200.9 and closed at $1188.8. This was the eighth consecutive day when prices closed positive in the international market. Since the beginning of the year gold prices have recovered 12 per cent and have hit a level seen previously in June 2015.
Tracking the late night movement, prices in the Multi Commodity Exchange too had gained Rs 934 on Monday. From the previous day’s close of Rs 27,524 prices moved to the day’s high of Rs 28,527 and closed at Rs 28,458 per 10 gm.
On Tuesday the international market was trading at $1191 per ounce before the US markets opened at IST 7.00 PM.
‘On Monday the Deutsche Bank stocks had fallen 10 per cent after rumours were rife in the market that the German bank major may default its bond repayments. Market feared that it could be a repeat of the fall of Lehman Brothers at the beginning of the global meltdown. European and US equity markets were down and the US dollar index too fell. Subsequently safe haven investments were seen flowing into gold,’ said Himanshu Gupta, senior research analyst, Karvy Comtrade.
“Stock indices worldwide tumbled on persisting fears of a global economic slowdown, while benchmark 10-year treasury yields hit their lowest in a year on demand for assets deemed less risky, such as bullion,’ added Abhishek Goenka, MD, IFA Global.
As for gold, the fundamentals were supporting a rally. Prices have been on the recovery track since the beginning of the year. Chances of US Federal Reserve developing cold feet on rate hikes, concerns of deflation due to declining crude oil prices and weakening of the dollar index have been supportive of gold prices.
“With the rally in gold prices, the hedge funds and investors seem to be returning on the buying side. Gold ETFs also saw good buying from investors to the tune of about 55 tonnes in January,’ said Chirag Mehta, Senior Fund Manager-Alternative Investments, Quantum AMC.
Though the Deutsche Bank issued a statement on Tuesday clarifying that its cash position was adequate for the bond repayment, the market did not budge. Equity markets in India, Japan and Europe were seen sliding on Tuesday as well. “Once the US gold markets open the recovery in gold prices may continue,” added Gupta.
If the prices break the psychological level of $1200 and sustain those levels, chances of further upward movement towards $1220 and $1230 are high. In such a situation, gold prices in the Indian market can move up to even Rs 29,000 per 10 gm.
“If prices can sustain the pullback rally, they can even move up to Rs 29,000 levels in the short term and consolidate around the higher levels till the budget,’ he added.
However, decline in dollar index and subsequent strengthening of rupee will have a bearing on domestic gold prices.
Source: TheHindu
