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Gold loses glitter as international price drops to four month low of below USD 1300 mark

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Buying gold this week? Take a careful look around what’s on offer, considering there has been a significant drop in market prices in the week. Unless the offer is extremely sweet, you can opt to hold back your cash. And if you are planning to redeem cash against your gold holdings, make sure to check the existing market rates for a good deal before selling. The interest for gold in the short-term can be guauged from what transpired in the international markets during the third week of May. Demand for Gold in international markets has entered a tepid phase starting from 11th May. And, in subsequent two sessions, Gold price dropped to $1292.07.

In the international market, Gold prices dropped by over 2% in the week. According to Reuters, Spot gold was down 0.1% at $1,288.96 an ounce by 3:00 pm, close to the previous day’s four-and-a-half-month low of $1,286.20. The price at the time of writing this story was a four month low of $1293.19. The last time when gold was trading at this price-bracket was on 28th December 2017.

Among the major factors affecting the price of gold are the stronger US Dollar. Also, a rise in US bond yields and concerns over political risk in Italy have held the dollar index to its 2018 peak. For Indian consumers, this dip in international markets may not percolate into a buy in the domestic markets considering the Indian Rupee has weakened against the Dollar. A costlier Dollar weakens gold buying for Indian consumers, although India is the world’s second largest consumer of gold.

Dollar has had a sublime performance against a basket of currencies. The rupee traded in the range of 67.78-67.59 against the US dollar on Thursday. The rupee has lost by at least 6% in 2018. Jewellers from the national capital region on Friday evening were quoting prices of Rs. 32,000 per ten grams of Gold. Gold of 99.9% and 99.5% purity came crashing by Rs. 240 to Rs. 31,780 and Rs. 31,630 per 10 grams respectively. In this week alone, Gold had shed by nearly Rs 600. On Wednesday price of Gold had dipped by over Rs. 430. Silver on the other hand managed to surprise by showing a moderate recovery. Silver commanded a price of Rs. 40,750 per kg, up by Rs 100 from Thursday’s price. There has been a positive uptake for Silver from coin makers and from industrial units. In the previous months, gold prices in the world remained on a high on account of concerns over US trade relations with China as well as geopolitical concerns in the Korean continent. Prospects of an interest rate hike from the US Federal Reserve countered these highs.

Care Ratings that came out with a report on Gold price, says that the price in the short-term could remain range-bound around the $1,350 per ounce bracket. The ratings agency also said that in the medium term, geopolitical tensions in the Middle East, increasing US government debt and rising inflation pressures, volatility and lower equity markets could offer support to gold prices. Consumer demand in India has been tepid. We saw a weak demand during Akshaya Tritiya with many consumers believing that Gold had sustained its peak price for quite some time. Demand during 2017 increased by 9% from the previous year, but it failed to reach what Indians consumed eight years ago in 2000-10, 865 tonnes. Any positive monetary announcements, economic data may have a negative impact on gold.

Courtesy: sify.com/ Image: lexpress.mu

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