
Gold opened on the Multi Commodity Exchange (MCX) on Tuesday at Rs 61,236 per 10 grams and hit an intraday low of Rs 61,232. In the international market, prices hovered around $ 1,987.58 per troy ounce.
Meanwhile, silver opened at Rs 72,081 per kg, hit an intraday low of Rs 72,080 on the MCX, and hovered around $22.89 per troy ounce in the international market.
Manav Modi, Analyst, Commodity and Currency, MOFSL, said, “Gold and silver prices continue to trade lower amidst a firmer US dollar index and a slight rise in U.S. Treasury yields at the start of this week.”
Last week’s non-farm payrolls reading saw markets sharply pare expectations for a rate cut by as soon as March 2024- supporting an up-move in Dollar Index and Yields.
Risk appetite also improved after the US jobs report, as it signalled just enough strength in the US economy for the possibility of a “soft landing and easing the chances of a rate cut in March”.
“Bets for a pause in December Fed meeting is at 99% while the possibility for a rate cut in March dwindled down from 60% to 40%. Along with interest rate expectations, central banks' gold buying pace this year is also supporting the overall sentiment on demand side,” said Modi.
The focus today will be on US and India CPI data. Investors have been betting that policymakers in the US, the Eurozone and the UK will start loosening monetary policy early in the new year, fuelling, however, these expectations will be tested this week after the inflation data, comments and actions taken by Fed, BOE and ECB in their respective policy meeting.
Anuj Gupta, Head of Commodity and Currency at HDFC Securities, said, “We noticed a profit booking at the end of the year 2023. Expectations of a delayed cut in interest rates by FOMC in the upcoming meeting put pressure on gold. Positive US job data is also putting pressure on gold.”
Also read: 51% of respondents say AI will help increase productivity at work: PwC Survey
Also read: Here’s how you can lower your bike insurance premium by avoiding minor claims
Sachin Kothari, Director at Augmont Gold For All, says, “For a better risk-adjusted return, investors should always allocate at least 15% of their portfolio to gold. The best option to invest in gold in India for the long term is through Sovereign Gold Bond (SGB).”
The RBI issues the SGB on behalf of the Government of India, and the Sovereign Gold Bond Scheme has an eight-year term. However, after the fifth year from the date of the issue of coupon payment dates, a premature withdrawal is permissible.
Other than gold price appreciation, investors receive an additional 2.5% interest on SGB semi-annually.
“The first tranche of SGB, which matured on November 30, 2023, gave a whopping 150% return to the investors, who held it till the maturity of eight years. Similar kinds of returns could be expected in investments through other tranches too, as gold is an eternal bull market,” said Kothari.