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Gold And Silver Prices In India Stay Strong On Rupee Woes

Olga Robert

Gold and silver prices in India remained closer to their all-times as the rupee fell to its lowest in 2019 on Tuesday. Weak GDP data, released on Friday after market hours, and the US dollar broad strengthening weighed on the domestic currency. The precious metals, that are imported in US dollars, becomes expensive when the rupee falls.

Gold futures on MCX touched Rs 39,296 per 10 grams on Tuesday, closer to its all-time high of Rs 39,425 seen last week. Similarly, silver futures were trading as much as 1.5 percent higher at Rs 48,492/kg.

International prices
The trend is India is opposing that of the international market where gold prices on Tuesday fell on the back of a stronger dollar. However, rates were closer to their multi-year highs on continued fear of global recession.

Spot gold was 0.5 percent down at $1,523.26 per ounce, still closer to last week's $1,554.56, which was the highest level since April 2013.

The dollar index, which is a measure of the American currency against six major currencies, climbed 0.4 percent to its over two-year high.

US-China trade war
On Sunday, the new eye-for-an-eye tariffs by the American government on Chinese imports became effective. China lodged a complaint against the US at the World Trade Organization over the new import duties stating that the latest round of tariffs was in violation of the consensus that the leaders of the two countries had reached at their meeting earlier this year in Osaka.

Brexit and political tensions in the UK benefits the dollar
British Prime Minister Boris Johnson had earlier vowed to leave the European Union on 31 October, with or without a deal, and a number of MPs (members of parliament) have come together across party lines to try to prevent the latter outcome. Johnson threatened to expel lawmakers of his own party who voted against him and also said that he will call a snap general election on 14 October, if needed.

The sensitive headline that indicated a constitutional crisis in the country caused the Pound Sterling to fall below $1.20 on Tuesday, the lowest level since October 2016.

The British pound is also one of the currencies in the basket that the dollar index is measured, making its losses, US dollar's gains.

Asian and Indian stock market
India's GDP growth falling to an over six-year low of 5 percent for the June quarter and manufacturing PMI for the month of August hitting a 15-month low hurt the Indian stock markets. Further, the tenth consecutive monthly sales decline in the auto sector and a slump in PSB stocks on merger announcement caused further damage.

Asian markets were dented on Tuesday as there seems to be no sign of ease in tensions between China and the US over their trade dispute.

As volatility in the equity and currency markets rise, investors seek the resort of precious metals.

Also Read:

Gold And Silver Prices In India Continue Their Fall; Here’s Why

Gold’s Recent Price Gains Reflected On Silver And Platinum As Well

Gold Prices Lower On Renewed Hopes Of US-China Trade Talks