Gold inches up to about Rs 1.48 lakh as festive season approaches

Gold and silver prices firmed slightly in Indian markets on Monday, 19 October, with traders weighing a softer outlook for US interest rates against a stronger rupee as the Dhanteras and Diwali festive season draws closer.

The December gold contract on the Multi Commodity Exchange (MCX) traded at about Rs 1.48 lakh per 10 grams in morning deals, around Rs 1,48,379, up roughly Rs 450 on the previous close. It touched an intraday high of Rs 1,48,499.

In the physical market, 24-carat gold sold at Rs 1,47,893 per 10 grams in the morning and was largely unchanged at about Rs 1,48,085 by the evening.

Silver also edged higher. MCX December silver traded between Rs 2,11,315 and Rs 2,12,013 per kg in the morning session and stood at about Rs 2,11,351 per kg later in the day.

Rates in Hyderabad and Vijayawada

In Hyderabad and Vijayawada, 22-carat gold retailed at Rs 1,35,700 per 10 grams on 19 October. These are indicative figures that do not include GST, other levies or jewellers’ making charges, so prices at the counter will be higher.

What is moving prices

Overseas, gold futures on COMEX climbed towards $4,200 an ounce. Part of the support came from the US Federal Reserve. Remarks by Fed Chair Kevin Warsh in Bangkok in mid-October, in which he declined to signal the central bank’s next step, have reduced market expectations of another rate increase this month. Higher interest rates tend to weigh on gold, which pays no yield.

Geopolitics also played a part. Rising tension between the United States and Iran, and fears that hostilities could resume, also drew buyers, alongside steady spot demand and fresh positions taken by traders.

The rupee, however, acted as a brake. A firmer currency trims the rupee value of global price gains. The rupee traded near 94.95 to the dollar, well up from close to 97 earlier in the month.

What comes next

Market participants are now watching the Fed’s policy meeting on 27 and 28 October, the next major event for bullion. Inflation data in the US has run hot, keeping the possibility of a move later in the year alive.

At home, attention turns to festival demand. Vijayadashami falls on 20 October, and Dhanteras, traditionally one of the busiest days of the year for gold and silver purchases, is on 6 November, two days before Diwali. How prices move over the next three weeks, with the Fed decision falling in between, will shape the mood in jewellery showrooms going into the festival.

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