Gold price premium in India halve amid soaring domestic rates

Marco Green
August 10, 2020

Muted demand was seen in some other Asian hubs like China as a worsening pandemic kept retail buyers away with global benchmark spot prices rose to new highs. However, on Monday, silver futures were trading higher by 1.29 percent at Rs 75,120/kg.

India has reported over 22 lakh coronavirus cases by now with more than 44,400 deaths.

Gold futures on MCX closed at Rs 54,789 per 10 grams on Friday, over Rs 1,400 less than its record high of Rs 56,191 during the day as USA spot gold hit an all-time high of $2,072.50 an ounce.

In June 2003, after a sustained five-year period of lower gold-silver ratios, the gold-silver ratio reached a high of 78.7:1, over the next five years the silver price rose from US$4.53/oz to a high of US$19.32/oz in March 2008, (Figure 1) an increase of 326%. On Friday, silver futures on MCX opened at a high of Rs 77,949 per kg and closed almost Rs 2,000 lower at Rs 74,160. Silver too continued its upward movement, with the price touching a record-high of Rs 77,840 per kilogram.

In the global market, gold slumped over 2 per cent on Friday, snapping its record-breaking rally, after a decent USA jobs report boosted the dollar, but a worsening pandemic kept prices on course for their longest streak of weekly gains in about a decade.

Meanwhile, with a view to further mitigate the economic impact of the COVID-19 pandemic on households, entrepreneurs and small businesses, it has been chose to increase the permissible loan to value ratio for loans against pledge of gold ornaments and jewellery for non-agricultural purposes from 75 per cent to 90 per cent, RBI said in its Statement on Developmental and Regulatory Policies.

Speculators reduced their bullish positions in COMEX gold and silver contracts in the week to August 4, the US Commodity Futures Trading Commission (CFTC) said on Friday.

Still many analysts remain bullish on gold, citing the possibility of more stimulus as global economic recovery remains wobbly.

Silver eased 0.1 per cent to $28.28 per ounce, while platinum gained 0.9 per cent to $970.12 and palladium climbed 0.5 per cent to $2,188.13.

Other reports by Click Lancashire

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