Gold Price Hits Record High, Crosses 760,000/10 Gram For The First Time In India.

Gold Price Hits Record High, Crosses 760,000/10 Gram For The First Time In India.

On Monday, the Multi Commodity Exchange (MCX) saw gold prices rocket to a new lifetime high as a result of the banking crises in the US and Europe. During Monday’s trade, the yellow metal price on the MCX crossed the 60,000 mark per 10 grammes for the first time.

At roughly 12:55 pm, MCX Gold futures were trading at 60,280, up by 897 or 1.51 per cent. At 1:23 pm, MCX silver prices increased by 599 or 0.87 per cent to trade at 69,100 per kg.

“Gold prices hitting a fresh high is an indication of slower economic development and lower interest rates with ample liquidity to help the system steer through the current crisis,” claims Colin Shah, MD, Kama Jewelry.

“In the coming months, we anticipate gold will advance further and reach new highs. It is anticipated to trade domestically in the range of $61,000 to $62,000 per 10gm. According to Shah, it may reach levels of $2,050 to 2100 per ounce internationally.

Reasons for the Surge in Gold Prices

The banking crises in the US and Europe have triggered a return to haven buying, causing the rise in gold prices. Investors are looking for safe-haven assets as a hedge against the uncertainty and volatility in the financial markets.

The surge in gold prices is also due to the weakening of the US dollar, which is making gold more attractive to investors. The US Federal Reserve has also indicated that it will keep interest rates low, making it cheaper to borrow money and invest in gold. Lower interest rates also reduce the opportunity cost of holding gold, as the metal does not yield any interest or dividends.

“Gold is projected to do strongly in the foreseeable future due to US Dollar tailwinds. The Dollar Index and gold have a negative association. When the USD Dollar Index declines, gold prices rise. Since October 22, the US Dollar Index has been declining, and as a result, the price of gold has been rising.

We anticipate that the US Fed will lower interest rates in 2023 as a result of the Silicon Valley bank crisis, which would further weaken the US Dollar Index. The co-founder of Alpha Capital, Dr Mukesh Jindal, expressed hope that gold will perform well in the months to come.

“With the reduction in US government yields across the curve and the weak US dollar, gold is anticipated to trade with a positive bias for the day. In addition, despite a rescue agreement for Credit Suisse and help from international central banks, demand for safe-haven assets may rise due to concerns over a contagion risk.

According to the brokerage firm ICICI Direct Research, the price of MCX gold is anticipated to continue rising towards the level of 59700. According to ICICI Direct, MCX silver prices are projected to maintain their upward trajectory towards the level of 69,300.

Gold in the International Market

Gold prices increased on the global market, passing $2,000 per ounce for the first time in almost a year. The price of gold increased 6.5% last week, marking its greatest weekly gain since the early days of the epidemic in March 2020.

This increase coincided with rising concerns about Credit Suisse Group AG and the failure of numerous regional American lenders. It first gave up some of those gains as word broke that UBS Group AG had agreed to purchase the Swiss lender in a last-minute, government-brokered deal; however, later in the session, it began to rise once again, which led to a total reversal of its earlier trend.

Markets are still being reassured despite global financial uncertainty, and the race is on. Gold prices on the spot market rose by 0.6% to $2,037 an ounce as of 13:23 local time in Singapore. The last time that gold prices traded above the psychologically important $2,000 mark was on March 10 of the previous year.

Factors Contributing to the Rise in Gold Prices

The banking crises in the US and Europe have triggered a return to safe-haven buying as investors seek refuge in assets that are less volatile and offer greater stability. The uncertainty surrounding the banking sector has led to a rise in demand for gold, which is considered a reliable store of value in times of economic turmoil.

The global pandemic has also played a significant role in the rise in gold prices. The pandemic has disrupted global supply chains, caused widespread unemployment, and led to a sharp decline in economic activity. Governments all around the world have responded by flooding the system with massive quantities of money, which has caused gold demand to soar.

Inflation has also contributed to the rise in gold prices. As the value of paper currency declines, investors seek to protect their wealth by investing in assets that are not affected by inflation. Gold has historically been a hedge against inflation and is seen as a safe investment in times of economic uncertainty.

The Impact on the Indian Market

India is one of the largest consumers of gold, with metal being an integral part of Indian culture and traditions. Gold is also considered a safe-haven asset in India, with investors turning to it during times of uncertainty.

The surge in gold prices has had a significant impact on the Indian market, with domestic gold prices hitting a fresh high. The rise in gold prices has also impacted the gold jewellery industry, with demand for gold jewellery falling due to the high prices.

The Future Outlook for Gold Prices

According to Colin Shah, MD of Kama Jewelry, the increase in gold prices is an indication of slower economic development and lower interest rates, together with enough liquidity to help the system navigate the current crisis. Shah predicts that over the coming few months, gold will continue to rise and reach new highs.

It is anticipated to trade domestically in the range of $61,000 to $62,000 per 10gm. Gold might hit $2,050 to $2,100 per ounce on the global market. Even though market turmoil and uncertainty are expected to continue, the outlook for gold prices looks good.

edited and proofread by nikita sharma