Gold prices in India have hit their new all-time high not once but twice in recent days.?Gold extended gains to hit fresh highs in Indian markets today morning.?
On India's first listed commodity exchange?MCX, futures rose 0.35% to?Rs 56517 per 10 gram, surpassing the previous high of?Rs 56,370 which it hit on Friday. Silver also firmed with futures rising 0.75% to?Rs 70,000 per kg level, as per Mint report.
Gold prices in the domestic market have breached the Rs 57,000 per 10 gram of 24-carat mark in recent days and are even above the Rs 58,000 mark in some states.
Also Read:?Kerala Becomes The First State In The Country To Introduce A Uniform Gold Rate
In global markets, spot gold was up 0.3% to a nine-month high of $1,926.07 per ounce. The dollar index today further slipped 0.3%, making dollar-priced gold a more attractive bet.
Some market experts believe that gold and silver prices could maintain the positive momentum of the previous year due to global inflation concerns, increased demand from the global central banks and worries about global growth.
Gold rates in India recently soared after data showed that the US inflation eased last month, thus boosting hopes that the US central bank the Federal Reserve would slow the pace of interest rate hikes in coming months.
Usually, gold prices fall when interest rates rise, while a decrease in rates helps keep the gold rate high.
In the past few months, fears of recession and rising interest rates led to a fall in stock prices in the developed world. At the same time, the fall of cryptocurrencies prompted investors to move toward safe haven. That is what likely spurred the demand for gold.
The latest trigger for gold has been an easing of inflationary pressure in the US and expectations for smaller interest rate hikes in coming months. Data released last Thursday showed that U.S consumer prices fell for the first time in more than two years in December, offering hope that inflation was now on a sustained downward trend. The Labor Department's report showed U.S. consumer prices grew 6.5% on an annual basis in December, in line with expectations, from a 7.1% rise last month, as per Mint.
Gold is an international commodity and is priced in the US dollar, so a softness in US Dollar lifts the prices of the yellow metal. The US Dollar index has softened from its high of 114 level witnessed in September to 102 levels.
Gold's rally has also been supported by a pullback in US bond yields. The precious metal is considered an inflation hedge but is highly sensitive to rising interest rates, which increase the opportunity cost of holding the non-yielding bullion.
Also Read:?When Tata Motors Came Out With A Nano Car?Worth?Rs 22 Crore
The recession fear in the West and geopolitical tensions have also played their part in the hardening of gold prices, say analysts. Gold is considered a safe haven and often attracts investments in times of uncertainty and slowdown, recession in the economy, the report mentioned.
Further, the US dollar as well as US bond yields have begun to cool off, which has been supporting gold. Buying of gold by global central banks and the potential positive impact on gold demand given the opening up of Chinese markets have also boosted prices.
Also Read:?How To Be Financially Prepared For A?Recession
As per experts, investors should note that a strategic allocation to gold can help diversify portfolios against market volatility and generate returns if things on the economic front go south.?While gold is currently at all-time high prices, rate hikes by the US central bank over the next few months can spur volatility in gold prices and give investors the opportunity to accumulate gold and build their allocation when prices dip.
However, if you are an investor entering the gold market at current levels, experts warn that new investors may now need to stay invested for a bit longer to realise further gains, as the gold prices have already rallied significantly.
For the latest and interesting financial news, keep reading Indiatimes Worth.?Click here.