As of Monday, July 29, 2024, gold prices in India have surged to ₹70,000 per 10 grams, reflecting a premium of ₹3,000 over international rates—the highest in a decade. This premium represents the additional cost Indian buyers must bear compared to global prices after conversion to Indian Rupees.
The recent cut in import duties initially lowered gold prices to their lowest in nearly four months, bringing them down to ₹68,510 per 10 grams by July 23, 2024, the day of the budget announcement. The following day, prices dipped further to ₹67,462 per 10 grams. However, the reduced duties spurred a sharp increase in demand, pushing prices back up.
Global Market Dynamics
On the global front, gold prices experienced an uptick on Monday due to rising geopolitical tensions and economic uncertainties. The price rise was fueled by ongoing Middle Eastern tensions and expectations of a potential interest rate cut by the US Federal Reserve in September. Spot gold increased by 0.3% to $2,391.80 per ounce as of 0205 GMT, while US gold futures rose by 0.4% to $2,390.50 per ounce.
Kelvin Wong, Senior Market Analyst for Asia Pacific at OANDA, noted, “Prices will likely remain in a range until the Fed meeting and Chair Jerome Powell’s comments. A dovish stance and softer jobs data could push prices towards $2,450 per ounce,” as reported by Reuters.
The Federal Open Market Committee’s meeting on July 30-31 is anticipated to maintain the current rate of 5.25%-5.50%. Nonetheless, weaker US jobs data from June and recent comments from Fed officials have led the futures market to fully price in a 25 basis-point cut in September. The upcoming ADP national employment report and non-farm payrolls data are critical indicators for the market.
Gold, traditionally seen as a safe haven during periods of geopolitical and economic instability, tends to perform well in low-interest-rate environments.
Market Outlook
Rahul Kalantri, VP of Commodities at Mehta Equities, provided insights on current price levels, stating, “Gold has support at $2,378-$2,362 per ounce and resistance at $2,412-$2,428 per ounce. In India, gold has support at ₹67,980-₹67,750 per 10 grams and resistance at ₹68,380-₹68,550 per 10 grams.”
Overall, gold prices in India will continue to be shaped by domestic policies, international market conditions, and geopolitical developments.
