Gold price hits four-month high; global trade tensions, stronger rupee support yellow metal

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Published: June 14, 2019 2:53:25 PM

Gold prices surged to their four-month high on Friday amid global geopolitical tensions, escalating US-China trade worries and stronger Rupee. Gold prices in India rose by Rs 331 to Rs 33,290 per 10 gram ahead of the Budget to be announced on July 5.

Spot gold was up 0.1% at ,326.49 per ounce by 0136 GMT, after touching its highest since Feb. 27 at ,327.90 on Monday.Gold prices hot four-month high amid global trade tensions

Gold prices surged to their four-month high on Friday amid global geopolitical tensions, escalating US-China trade worries and stronger Rupee. Gold prices in India rose by Rs 331 to Rs 33,290 per 10 gram at futures trade ahead of the Budget to be announced on July 5. According to market experts, global growth concerns, unlikely rate cut by US Federal Reserve and correction in global equity markets have triggered an inclination towards the yellow metal among investors.  

Gold prices increased mostly because of international reasons than domestic. The unlikely interest rate cuts by the US Fed and geopolitical tensions in Iran besides the burgeoning trade conflict between the two economic giants the US and China have led to a rise in gold prices, Ajay Kedia, Director, Kedia Commodities told Financial Express Online. Profit booking in the Indian equity markets and Rupee being under 70 per dollar has also contributed to the rise in Indian currency.

“Gold crossed the level of $1,350 an ounce, a level that was last seen in April 2018. Prices are heading for a fourth weekly gain, the longest streak since January. Investors are also pouring into gold-backed exchange-traded funds, with holdings expanding to the highest since late February,” Jigar Trivedi, Fundamental Analyst – Commodities at Anand Rathi Securities Shares & Stock Brokers told Financial Express Online.

“In the light of the weaker-than-forecast economic growth, the cooling labour market, rising unemployment benefits and the mounting budget deficit, calls for a rate cut has increased. Dovish hints from the Fed have provided additional fuel to traders. The odds of the Fed’s dovish shock with a 25bp cut in rates next week are close to 33% according to CME’s Fed Watch tool. Meanwhile, China’s commerce ministry said Beijing will not yield to any “maximum pressure” from Washington, and any attempt by the United States to force China into accepting a trade deal would fail. Therefore, we expect more inflows into SPDR gold ETFs, and this would further support a rise in gold prices,” Trivedi further added.

On the Multi Commodity Exchange, gold to be delivered in June contracts was up by Rs 331, or 1 per cent, to trade at Rs 33,290 per 10 gram in a business turnover of 18,187 lots. Internationally, gold was trading 1.01 per cent up at USD 1,357.30 an ounce in New York.

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