Most recent article: India Gold price Tuesday: Gold shines, according to MCX data
Gold prices fell in India on Friday, according to data from India's Multi Commodity Exchange (MCX).
Gold price stood at 63,093 Indian Rupees (INR) per 10 grams, down INR 319 compared with the INR 63,412 it cost on Thursday.
As for futures contracts, Gold prices decreased to INR 63,312 per 10 gms from INR 63,389 per 10 gms.
Prices for Silver futures contracts decreased to INR 74,264 per kg from INR 74,959 per kg.
| Major Indian city | Gold Price |
|---|---|
| Ahmedabad | 65,385 |
| Mumbai | 65,210 |
| New Delhi | 65,250 |
| Chennai | 65,320 |
| Kolkata | 65,315 |
Global Market Movers: Comex Gold price regains poise on final trading day of 2023
- Comex Gold price meets fresh buyers amid broadly subdued US Dollar and the US Treasury bond yields.
- Market participants are pricing in a rate cut by the Federal Reserve from March 2024.
- The Fed is expected to start reducing interest rates as inflation in the United States economy is in a downtrend.
- As per the CME Fedwatch tool, market participants see more than an 88% chance of the Fed cutting interest rates in March. The likelihood of the Fed trimming interest rates further in May is more than 65%.
- Bets in favor of early rate cuts by the Fed are very healthy as the underlying inflation rate has dropped to 3.2% in November. The Fed, in its latest projections, anticipated this number at the end of December 2023.
- There is a reasonable chance that the Fed will achieve a soft landing as the Unemployment Rate has been steady around 3.7% and lay-offs have remained lower than new payroll additions in every month of 2023.
- As 2024 is set to kick-in, a further move in the Gold price would be guided by whether investors have priced in rate cuts too much or whether economic shrinkage will emerge suggesting current pricings are fair.
- A league of investors and Fed policymakers believe that investors have gone too far ahead in discounting rate cuts. The impact is clearly visible in the US Dollar Index (DXY), which is down 6.31% from October’s high of 107.35.
- The USD Index is expected to end the year with a loss of almost 2.5% on expectations that the Fed would be the first major central bank to cut.
- Nevertheless, other western economies are also expected to start reducing interest rates as price pressures are easing globally.
- Unlike other economies that are prone to economic contraction, the US economy is resilient. Sheer strength in economic prospects could keep additional inflationary pressures above the required rate of 2%.
- Due to a light economic calendar, second-tier weekly Initial Jobless Claims data for the week ending December 22 may bring some action in the FX domain.
- Market participants are anticipating individuals claiming jobless benefits rose to 210K, nominally higher than the former reading of 205K.
- Next week, employment and Manufacturing PMI data for December will keep investors busy.
- Meanwhile, import of Gold in China from Hong Kong rose 37% in November after the People's Bank of China (PBoC) eased some import restrictions to meet expected demand for the Chinese New Year, as reported by Reuters.
(An automation tool was used in creating this post.)
Gold FAQs
Why do people invest in Gold?
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Who buys the most Gold?
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
How is Gold correlated with other assets?
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
What does the price of Gold depend on?
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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