Gold prices surge over ₹2,000 per 10 gram in just 2 weeks
Singapore (Jan 5) Gold and silver prices in India continued their rally, lifted by a surge in global rates amid Middle East tensions. On MCX, gold futures prices on Friday surged over 2% or ₹850 to ₹40,130 per 10 gram, adding ₹2,000 per 10 gram in just two weeks. Tracking gold, silver prices have also surged, closing 1% higher at ₹47,520 on Friday.
In global markets, gold prices surged to near a six-year high after a US airstrike killed one of Iran’s most powerful generals, ratcheting up tensions in the Middle East and driving demand for safe have assets. Gold rose as much as 1.5% to $1,551.52 an ounce in the spot market on Friday.
Gold was also supported by weak US ISM manufacturing data, strengthening the case for owning bullion as a hedge against dimming growth outlook.
Gold prices are likely to remain supported by geopolitical tensions, says Abhishek Bansal, chairman of ABans Group of companies. Gold has also found support after China announced a reserve rate cut by 50 bps from January 6 to support the economy, a move which will release around 800 billion Yuan in funds, he added.
"An easing monetary policy will increase liquidity in the Chinese market and demand for gold will pick up. Domestic gold prices are likely to rally further following weakness in the Indian rupee," he added.
Iran has threatened to hit back hard after a US air strike in Baghdad killed Qassem Soleimani, commander of Iran's elite Quds Force. Meanwhile, US President Donald Trump warned the US has “52 Iranian sites" picked out as targets should Tehran retaliate for the airstrike that killed a top Iranian general,
Gold imports into India in 2019 fell sharply from a year ago to the lowest level in three years, with demand hurt by a surge in prices, Reuters reported citing sources. India meets nearly all its gold demand through imports.
Gold prices surged 25% in India last year, supported by global rally, hike in import duty and rupee's depreciation against the US dollar. Imports amounted to 831 tonnes imported in 2019, down from 944 tonnes a year ago, according to the report. As gold has extended the last year's monster rally into 2020, demand is likely demand muted.
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