On Tuesday, gold prices in the country’s capital Delhi increased by Rs 800 to Rs 1.63 lakh per 10 grams. The reason for this was that the concerns about inflationary pressure were reduced due to signs of success in the talks between America and Iran. According to local market experts, gold of 99.9 percent purity increased by Rs 800 to Rs 1,63,600 per 10 grams (including all taxes). At the time of market closure on Monday, its price was Rs 1,62,800 per 10 grams. However, silver prices fell by Rs 5,000 and reached Rs 2,71,000 per kg (including all taxes). The reasons for this were weakness in industrial demand and sluggish trends in global markets.
Why did the price of gold increase?
Saumil Gandhi, senior analyst of commodities at HDFC Securities, said gold prices rose on Tuesday as expectations of resumption of talks between the US and Iran increased. This eased some concerns about long-term inflationary pressure from energy prices. He further said that the market sentiment turned positive after US President Donald Trump’s statement that he has postponed the planned military attack on Iran. This indicated that a diplomatic solution with Tehran may still be possible. He said that due to easing of geopolitical tensions, there was a slight decline in crude oil prices, which provided some support to the precious metals after the recent sharp decline. Additionally, ‘bargain buying’ (buying at cheap prices) and ‘short covering’ have contributed to the recent recovery in the precious metals after heavy selling last Friday.
Gold and silver in international market
In the international market, spot gold was trading 0.47 percent down at $ 4,544.78 an ounce, while silver fell 2.01 percent to $ 76.12 an ounce. Praveen Singh, head of commodities at Mirae Asset Sharekhan, said spot gold prices were trading at a low of around $4,540 an ounce as oil prices, though down slightly, still remained at high levels. He further said that investors are now waiting for the minutes of the US Federal Open Market Committee (FOMC) meeting to get further signals about the interest rate cycle and its impact on precious metals prices. Singh said that due to uncertainty regarding global interest rates, crude oil prices and geopolitical developments in West Asia, prices of precious metals may remain volatile in the near future.
