Gold prices rose in India on Wednesday, according to data from India's Multi Commodity Exchange (MCX).
Gold price stood at 72,445 Indian Rupees (INR) per 10 grams, up INR 523 compared with the INR 71,922 it cost on Tuesday.
As for futures contracts, Gold prices increased to INR 72,540 per 10 gms from INR 72,297 per 10 gms.
Prices for Silver futures contracts increased to INR 85,525 per kg from INR 85,417 per kg.
| Major Indian city | Gold Price |
|---|---|
| Ahmedabad | 74,950 |
| Mumbai | 74,735 |
| New Delhi | 74,735 |
| Chennai | 74,930 |
| Kolkata | 74,870 |
Global Market Movers: Comex Gold price gains momentum amid investment demand
- The US Producer Price Index (PPI) rose 2.2% YoY in April, compared to the 1.8% increase in March and matching expectations. The Core PPI jumped 2.4% YoY in the same period, compared to an increase of 2.1% in March. On a monthly basis, the PPI and the core PPI both rose 0.5% MoM in April.
- Fed Chair Jerome Powell said that inflation is falling slower than expected, and the PPI data provided more justification to keep rates higher for longer. Powell added that more rate hikes likely won't be needed.
- Kansas City Fed President Jeffrey Schmid noted that inflation remains too high, and the US central bank has more work to do.
- The annual headline Consumer Price Index (CPI) inflation is expected to ease to 3.4% in April from 3.5% in the first estimates. The Core CPI inflation is estimated to drop to 3.6% in April from 3.8% prior.
- The US Retail Sales is projected to decline to 0.4% MoM in April from 0.7% in the preliminary reading.
- Financial markets are currently pricing in nearly 65% odds of a rate cut by the Fed in September 2024, according to the CME's FedWatch Tool.
- Global gold demand rose by 3% to 1,238 tonnes, making it the strongest first quarter since 2016, according to the World Gold Council's Q1 2024 report.
(An automation tool was used in creating this post.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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