New Delhi [India], August 1 (ANI): International gold prices are hovering near the USD 1,700-1,760 level per ounce and are expected to trade steady in the coming weeks, a report said on Monday. There was a small uptick in prices as a result of speculation that the rate hikes by the US Fed may gradually moderate over time. “The direction of gold prices has been inextricably intertwined with the direction of the US Dollar. The rate hikes by the Fed and the rise in market yields provided the background for the fall in gold prices. As the US Dollar index surged with higher interest rates a natural consequence of the same is that gold prices dropped,” financial advisory firm Emkay Wealth Management said in a note. Even the persistent inflation could not help any revival in gold prices. It indicates that prices of gold are getting delinking from the level of inflation, one phenomenon that it was known for – a shield against inflation.
“As of now, a minor rise in gold prices is due to the softening of the US Dollar. The US Federal Reserve Chairman stated that the future rate action will be data-dependent, also added that the US in not near any risk of slipping into a recession. The statement has given hopes that the Fed will slow down the rate hikes post the September meeting,” the note by the advisory firm said.
Gold on the Multi Commodity Exchange of India (MCX) has been trading in the range of Rs 50,258-52,122 per 10 gram for the past few months.
While it may continue to trade within these broad ranges, the direction of the Indian rupee would be crucial at this juncture, it said.
Notably, the import duty hike imposed by the Indian central government in early July may have kept gold prices largely steady in the domestic markets.
The Central government had raised the import duty on gold from 10.75 per cent to 15.0 per cent. India is the second-largest consumer of gold, and it fulfills a major portion of its demand through imports. India is a net importer of gold.
The upward revision in the import duty was seen as a measure to disincentivize imports amidst the country’s widening trade deficit — meaning a difference between net imports and exports. (ANI)
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