Gold price in India saw a surge on Friday, November 5. The yellow metal has been under pressure for the last few weeks, especially during Dhanteras, ahead of Diwali. However, gold regained its shine on Friday. On the Multi-Commodity Exchange (MCX), December gold price rose 1.21 per cent to Rs 47,571 for 10 grams at 0905 hours on November 5. Silver price also jumped sharply on Friday. Silver was trading at Rs 64,224, up by 2.82 per cent on November 5.
In the international market, gold price edged higher on Friday. The yellow metal price surged after US Federal Reserve had decided this week to not rush to raise interest rates. Spot gold was up 0.2 per cent at $1,795.64 per ounce, as of 0216 GMT. US gold futures rose 0.2 per cent to $1,796.50, according to Reuters. The benchmark US 10-year Treasury yields pulled back from a one-week peak.
US Federal Reserve said it would begin unwinding its pandemic-era stimulus, but held to its belief that high inflation would prove “transitory” and likely not require a rapid rise in interest rates. The Fed announced a $15 billion monthly cut to its $120 billion in monthly purchases of Treasuries and mortgage-backed securities. The dollar eased following the announcement by the US Federal Reserve.
The demand for gold during the September quarter jumped 47 per cent year-on-year to 139.1 tonnes as compared to 94.6 tonnes in the year ago. The jewelery demand also witnessed a jump of 58 per cent year-on-year in India during July –Sep 2021 period to 96.2 tonnes due to strong pent up demand, occasion related gifts, economic rebound and lower prices.
Gold is a proven long-term hedge against inflation. Indian middle class has always opted for gold either as jewelleries or assets during festivals or weddings as the yellow metal is immune to the volatility of stock market or safer bet against new age cryptocurrencies.
On gold’s future, Motilal Oswal Financial Services said, “Bullions have been in a consolidation mode from last Diwali to this Diwali, and in the past few months have witnessed some choppiness amidst volatility in U.S. Dollar and bond yields. For the first half of the year, better than expected economic data and hawkish outlook from the Fed have kept most market participants on the edge, while the second half has been witnessing weaker data set and change in Feds approach which could get the gold bulls excited once again.”
The analysts predicted that gold prices could surge towards highs of Rs 52,000-53,000 over the next 12 months. “We have been bullish and continue to maintain a positive bias for gold price over the next 12 months, and expect that the consolidation is stretched could see some directional move soon. The current scenario could have some short term hiccups which might give investors a better buying opportunity. We believe that gold has a potential to surge towards $2000 once again and might even make a new life time high on the Comex. On the domestic front we expect prices to surge towards highs of Rs 52,000-53,000 over the next 12 months, the analysts mentioned.