Bengaluru: Gold prices in India fell sharply on Friday tracking a similar slump in global rates after US job numbers exceeded expectations. On MCX, October gold futures settled nearly ₹1,000 lower at ₹54876 per 10 gram, after earlier in the session hit a record high of ₹56,191 per 10 gram. Silver futures also tumbled 2% to ₹74,483 per kg, after rising to ₹77,949 at intraday highs.
In global markets, gold prices slumped over 2% on Friday after a decent US jobs numbers snapped its record-breaking rally. Spot gold had hit a record high of $2,072 this week.
The US dollar rebounded after the jobs report, causing a sell-off across the board in the metals sector. The US dollar rebounded from two-year lows after data showed US nonfarm payrolls increased 1.763 million in July.
Also weighing on gold was an impasse in the new US coronavirus aid bill. Fears of a stimulus-led inflation uptick had investors dumping dollars in favour of gold, but the better-than-forecast jobs print overwhelmed that narrative on Friday, say analysts.
Real interest rates – which strip out the effects of inflation – inched higher in the US after the July jobs report. A persistent interest rates had investors into gold in recent weeks.
Meanwhile, in India, premium on gold eased this week to about $4 an ounce over official domestic prices, from last week’s $8. Soaring high prices and coronavirus crisis continued to impact gold demand. Gold prices in India are up over 43% this year, tracking a global rally as the coronavirus crisis, low interest rates and geopolitical risks spark a flight to precious safe-haven assets like gold.
To deal with economic distress caused by COVID-19, the Reserve Bank of India earlier this week increased the limit of advance against gold ornaments and jewellery. Currently, up to 75 per cent of the value of gold ornaments and jewellery can be availed as loan for non-agriculture purposes. The limit was raised to 90%.
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