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Gold Prices Edge Higher On Brexit Concerns And Weaker Rupee

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On Thursday, gold prices in India rose amid an upward trend in the international market and rupee's weakness. In morning trade, October gold futures on MCX were trading higher by 0.22 percent at Rs 39,251 per 10 grams, closer to its new high of Rs 39,340 that it touched last week. Silver futures were trading at Rs 46,841 per kg. It touched a fresh lifetime high of Rs 46,925 on Wednesday.

Gold Prices Edge Higher On Brexit Concerns And Weaker Rupee
 

The rates were higher in the country on account of a rally in the prices of the metals in the global commodity markets. Further, a weaker rupee makes these gold costlier for Indian buyers as it is imported in US dollars.

In the international market, spot gold rose by 0.2 percent to $1,542.06 an ounce. It hit an over six-year high of $1,554.56 per ounce on Monday. Global markets are bullish in times of political and economic uncertainties. Traders are holding on to the bullion as they await further news on the trade dispute between the US and China.

On Wednesday, the US administration made official the recently announced 5 percent retaliatory tariffs by President Trump. This brings confusion as to whether or not the Chinese and American authorities will resume their in-person trade talks in September as earlier suggested.

These concerns were further piled on with British Prime Minister Boris Johnson's decision to suspend Parliament for more than a month before Brexit. Queen Elizabeth II approved Johnson's request to suspend Parliament from mid-September and re-open it on 14 October, which is just two weeks ahead of the scheduled deadline of 31 October for Britain to leave the European Union.

The "prorogation of Parliament" prompted outrage from many of the British MPs (members of the parliament) who see this as a move to stop lawmakers from blocking a no-deal Brexit. Johnson said his decision was necessary to "get on with our domestic agenda" and introduce his new legislative program.

 

The gloomy global sentiment caused the yields on 30-year US Treasuries and 10-year German bonds hit record lows on Wednesday. Amid expectations of interest cuts from top central banks, gold appreciates in value as it reduces the opportunity cost of holding non-yielding bullion.

Further, an increase in gold purchases by central banks and continued investor fund flow in gold ETFs are also keeping the rates high due to increased demand.

Read more about: gold gold prices
Story first published: Thursday, August 29, 2019, 14:49 [IST]
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