Gold prices continue to rise, hover around Rs 35,000; here's why

Gold prices continue to rise for the sixth consecutive session on Tuesday as investors shifted towards safe haven assets amid persistent worries over escalating geopolitical tensions coupled with increase in domestic demand.

On the domestic front, gold for delivery in August contracts traded higher by 1.31 per cent to Rs 34,893 per 10 gram in intra-day trade on the Multi Commodity Exchange (MCX). It opened high at Rs 34,490 against previous close level of Rs 34,441. The contract was currently trading at Rs 34,725 per 10 gram.

The October contracts, also, rallied by over 1 per cent to Rs 35,100 per 10 gram.

Globally, spot gold was trading up by 0.53 per cent at $1,428.05 an ounce in New York, breaching psychological level of $1,400 for the first time since 2013.

Interestingly, in the past one week, investor appetite for gold rose sharply due to a dovish shift from major central banks, geopolitical situation in Middle East and the ongoing trade tensions between the US and China.

The US Federal Bank last week left interest rates on hold, which added to the bullishness on gold.

"Spot gold prices in the London market were hovering near six-year highs on growing tensions in the Middle East and dovish comments from the major Central banks that boosted the yellow metal's safe haven appeal. A weak dollar, which plummeted to a three-month low on expectations of an imminent interest rate cut by the US Federal Reserve also assisted the sentiments," said Hareesh V, Head Commodity Research, Geojit Financial Services.

Edited by Chitranajan Kumar

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