Gold prices in India continue to shine even as global rates calm. On the MCX, gold prices on July 30, 2020 rallied by 0.35% or Rs. 184 to Rs. 53371 per 10 gm. Silver prices also however eased marginally by Rs. 78 or 0.12% to Rs. 65276 per kg.
In both the bullion as well as futures market, gold for the first time topped Rs. 53000 per 10 gm mark on rising uncertainty. Before the Fed's decision, much of the spurt in gold prices is owed to the weakness in dollar which showed some recovery though initially from 2-year low.
International gold rates
In the international market, gold rate eased somewhat as US Fed's stance of supporting the coronavirus battered economy has been taken positively, with an improved risk sentiment. Nonetheless, dollar's weakness kept the downside in gold under check. Spot gold fell 0.3% to $1,964.51 per ounce by 0052 GMT after rising 1% in the previous session. U.S. gold futures rose 0.3% to $1,959.60.
This is as the Federal Reserve of the US in its meet kept low-term interest rate pegged near zero. And also at the policy meet end said, while the economy has rebounded from the depths in March and April when most non-essential business was shut, still the pandemic "will weigh heavily on economic activity, employment and inflation." The uncertainty that looms will further add to the glitter of the precious yellow metal.
Also, it will continue buying about $120 billion in Treasury and mortgage bonds each month, which are intended to inject cash into financial markets and spur borrowing and spending.
Physical demand waning on record high prices in India
On a year to year basis, the demand for physical gold has been dragged by 36% to 677 tonne, the lowest since Q12019, this is as per the Refinitiv data.
Outlook on gold prices in the short term
"The increased volatility shows lack of conviction about sustainability of the recent sharp up move. A dovish stance by the Fed has been factored in . So, unless there is some surprise from today's (July 29) Fed monetary policy meeting, gold could see some correction," said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
Navneet Damani, Vice President, Motilal Oswal, said the broader trend on COMEX could be in the range of $1,920-1,990. "On the domestic front, prices could hover in the range of Rs 52,160- 52,950."