Why gold rates have climbed to Rs 31000 despite a stronger dollar Why gold rates have climbed to Rs 31000 despite a stronger dollar Source : SIFY Last Updated: Wed, Jan 17, 2018 17:37 hrs
The first fifteen days of the new year have already taken the markets by surprise. Gold, often been criticised as a dead investment, has jumped up in valuations. Although the jump of nearly 3% in a fortnight may not improve your valuations significantly, the rise still holds good in comparison to how bitcoin – branded by some as the new gold – and other crypto-currencies have fared. It’ s in fact a “Jouncing January” for cryptos .
The trend should sound surprising considering the wedding season is about to close and considering geopolitical tensions in the Korean peninsula have not re-surfac ed during this period.
Currency valuations, with a dip in dollar (until Monday) against a basket of reserve currencies, seem to have given Gold fresh wings. Gold had peaked to a high of $1344.44 on Monday, a first since September, although US’ gold futures were trailing 0.
1 per cent in the negative at $1335.40 an ounce.
The Gold graph in the past 15 days has shown a consistent rise, with rates across major cities- Mumbai, Chennai, Bengaluru, Delhi, Kolkata - going up . Price of 916 or the 22 Karat Gold per gram has risen from Rs 2688.55 on January 2 to Rs 2754.82 on Wednesday (January 16).
Gold as such has risen by Rs 66.27, or nearly 3%.
The week has already observed valuations of Bitcoins and other cryptocurrencies take a hit, owing to regulatory concerns. This has helped gold , especially with investors utilizing the reserve funds to park funds in the safe-haven asset .
Gold has improved over bitcoin, considering the yellow metal has gained nearly Rs 475 from the four previous sessions. A few of the top factors that investors would have on top of their mind are: Although current gold rates are at a premium, the demand has been consistent from local jewelers thanks to the ongoing wedding season. This demand is expected to continue at least until the end of January. International markets are at a peak, with Gold rates rising across Singapore as well as the US. The cost of importing gold too has increased, owing to a higher dollar. Rupee slumped to Rs 64.
03 on Wednesday against Monday’s closing price of Rs 63.
49. Dealers will have to shell more Rupees in order to buy the same quantity. This would have a further impact on the domestic markets.
Sovereign Gold too edged up as much as Rs 50 to Rs 24800 per eight grams of Gold. Gold for its part has already observed a jump of Rs 475 in the four previous sessions.
Other commodities such as Silver too have fared well with rates rising as much as Rs 100 per kilogram.
While bitcoins have slumped, Gold surprisingly has regained its lustre.
Data from Sify’s Gold rates databank show a positive trend. Rates in Chennai, for instance have increased continually in the past four trading sessions. The rate on Wednesday was up by 0.
31% for both the 22 Karat and 24 Karat variants.
Ditto for other cities.
Rates on Wednesday jumped the most in the national capital (0.52%) at Rs 31732.62, followed by Kerala (29893.05) with a 0.36% jump.
Rates in Mumbai were high by as much as 0.85% for the 24 Karat variant, with prices closing Wednesday at Rs 31572.
19 for ten grams.
Gold import duty concessions
A lack of physical demand for Gold in Asia coupled with the prospect of three US Fed’ rate hikes has also meant a headwind for Gold.
The commerce ministry has already been flooded with requests for a concession in import duty in the Budget. There were murmurs on that the government may look at cutting a Gold import duty from 10% to 4%, T hese however seem to be more speculative and part of lobbying efforts rather than official comments. The Gems and Jewellery Export Promotion Council (GJEPC) had previously demanded a cut in import duty on gold to 4% from 10% in order to improve exports within the country.
“Why not we actually, freely import more gold and export value added gold products. If it happens, then sudden surge of gold imports from FTA (free trade agreement) countries will also stop,” shared a senior official from GJEPC.
A World Gold Council report released this week predicts Gold demand to peak to a fresh high than the previous year.
The Council attributes the growth to four factors- majorly, a synchronised global economic growth, shrinking balance sheets and rising rates, frothy asset prices and market transparency. The council added that the after an initial GST led implementation shock, there could be a positive effect to the economy, which would spur demand for gold.
If the rates in the past fifteen days are anything to go by, Gold prices certainly seem to have moved and there can be an expectation for these prices trends to hold at least till the budget announcement.
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