Gold prices have been on an upward trajectory since last Friday. In the international markets gold has been holding above the $5,000/oz mark. Even in domestic markets, Gold MCX Futures are holding steady. India’s Finance Minister, Nirmala Sitharaman, has said that gold prices in the country have not gone beyond certain limits and the government is closely monitoring the prices of the yellow metal.
“Gold is always an investment for households and has seen seasonal spikes during the festival season. We are watching it, but we are not seeing that prices have gone beyond a certain limit,” FM Sitharaman said at a press conference in New Delhi following the customary post-Budget meeting with the Central Board of Directors of the RBI.
In the same media briefing, RBI Governor Sanjay Malhotra pointed out that the order value of gold imports did not increase despite the recent surge in the prices of the yellow metal, as per the ANI report.
Sitharaman added that India mostly imports gold, pointing that the demand for yellow metal has not reached alarming levels.
“All gold which comes off the market is imported. In this country, the dependence on precious metals is very much from outside only…We don’t have our own source of exploring and extracting gold. Steps are being taken, but not sufficient to meet our demand. Gold has always been a favoured investment for households…” ANI quoted Sitharaman
She added that , “The high-pitched demand for domestic consumption also sees a seasonal spike during festival season…We are watching it, but I’m not sure it has reached such alarming proportions…I think it has not gone beyond a certain limit. But of course, RBI will also be monitoring it…“ ANI quoted the finance minister.
Nitharman noted that the central banks globally gold and silver are purchasing and selling precious metals.
“Most countries today, particularly their central banks, are buying gold and silver and storing them. It’s a tendency when you talk of Indian consumer market, Indian households, every central bank has some, but of late ,you notice that many of the central banks outside are also buying gold…Now the spike is largely due to central banks also buying and storing. For our domestic consumption, which is a usual thing which happens every season, every festival, every household purchase is affected because of the global increase in gold and silver prices, which are much beyond the usual increases and fluctuations which happen in the gold and silver market….” Sitharman said to ANI.
In the same media briefing, RBI Governor Sanjay Malhotra pointed out that the order value of gold imports did not increase despite the recent surge in the prices of the yellow metal, as per the ANI report.
Current prices of gold and silver still below January highs
On MCX, gold futures are currently trading at Rs 1.59 lakh per 10 grams, while silver futures are trading at Rs 2.64 lakh per kg. In late January, prices of precious metals had touched new record highs, with MCX gold futures trading at Rs 1.91 lakh per 10 grams.
Meanwhile, MCX silver futures were trading near the Rs 4 lakh per kg mark.
Since then, the precious metals market has seen volatile trading sessions. Experts had said that the price swings in gold, and especially in silver, were mostly driven by heightened speculative trade in the markets.
Where are the prices of gold and silver headed?
Analysts have said that the near-term undertone for gold and silver remains bullish due to geopolitical uncertainty, dollar weakness, supply concerns, and robust investment and industrial demand.
“Today, silver and gold futures rose by 5.25% and 1.75%, respectively, crossing Rs 3,00,000 per kg and Rs 1,45,000 per 10 grams on the MCX, marking fresh all-time highs,” said Satish Dondapati, Fund Manager – ETF at Kotak Asset Management Company.
Dondapati added that precious metals received additional price support at higher levels due to the sudden imposition of tariffs by the US on a few European nations, following recent developments related to the Greenland issue.
The analyst noted that over the past one year, silver prices have surged by more than 170%, while gold has gained over 70%. He added that both metals are widely regarded as safe-haven investments, and silver, being an industrial metal as well, has an added advantage in the current macroeconomic scenario.