New Delhi:Gold and silver prices in India rose sharply on Friday, in tandem with a rally in global rates. On MCX, October gold futures rose 1% to ₹51,399 per 10 gram while silver rates jumped 1.5% to ₹51,399. Gold prices in India saw big swings on Thursday and Friday amid volatile global rates. Gold prices in India still remains down about ₹5,000 per 10 gram as compared to its August 7 highs of ₹56,000.
In global markets, gold prices rebounded over 2% on Friday, boosted by a weak US dollar and the US Federal Reserve’s signalling a prolonged low interest rate strategy. US gold futures settled up over 2% at 1,974 an ounce. Gold rates had plunged over 2% on Thursday after US Treasury yields gained following a speech by Fed Chair Jerome Powell on US central bank’s new strategy.
The Fed chairman on Thursday said the central bank would adopt an average inflation target, meaning rates are likely to stay low even if inflation rises a bit in the future. This should help gold, a non-interest bearing asset, say analysts. Low interest rates tend to support gold, which is also a hedge against inflation and currency depreciation.
Massive stimulus pumped into the market by central banks and governments to prop up their coronavirus-damaged economies has helped gold gain over 28% this year.
On the other hand, the biggest risk to gold remains the discovery of a vaccine and a sharp correction in stocks, says analysts.
Back in India, the sixth tranche of sovereign gold bonds of this fiscal will open for subscription on Monday. The Reserve Bank of India, which issues gold bond on behalf of the government, has fixed the rate at ₹5117 per gram. The issue closes on September 4.
Investors applying online and the making the payment against the application is made through digital mode get a discount of ₹50 per gram.