Gold was trading in the green on the Multi Commodity Exchange (MCX) with a rise by ₹430 or 0.96 per cent on Thursday. The gold futures on MCX was slightly higher at ₹45,270 per 10 gram from a low in the previous session. Silver futures also rose by ₹1,087 or 1.67 per cent to trade at ₹68,314 per kg. In the previous session, gold closed at ₹44,840 per 10 gram and silver at ₹67,227 per kg.
While the precious metals witnessed slight relief on Thursday, their prices have fallen by more than ₹10,000 from their previous year hikes. Last year in August, the bullion, often considered as safe haven assets in face of uncertainty, traded as high as ₹56,200 per 10 gram while silver recorded a peak of ₹77,800 per kg during the same time.
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In the international market, gold rose to an over two-week high as the US Federal Reserve announced to keep near-zero interest rates for next two years. Spot gold increased 0.4 per cent to $1,750.82 per ounce, US gold futures too climbed 1.3 per cent to $1,749.80.
“There was a risk-on response (after the Fed announcement) and the dollar weakened significantly. One might expect dollar negativity to be supportive for gold. That wasn’t what happened, the main logic there really had to do with yields, which were on the march higher,” Reuters quoted Ilya Spivak, currency strategist at DailyFX, as saying.
The high performing US Treasury yields and interest rates increase the opportunity cost of holding the non-interest bearing safe-haven assets. The US dollar index slipped to a two-week low and the treasury yields held close to a year peak.
“If the dollar continues its weakening track and yields continue to be calmed by Fed language, then this can set gold up for a test of $1,800,” Nicholas Frappell, global general manager at ABC Bullion, was quoted as saying by Reuters.