Gold reclaims Rs 30,000-level tracking strong global cues

The precious metal trades above $1,300 in international markets.

Chennai:

Gold prices in the domestic spot market breached Rs 30,000 level on Monday as the international gold rates moved above $1,300 per ounce during the intra-day trade.

The weakness in dollar and the Bank of Japan’s stand on its monetary policy lent some support to the precious metals.

In the domestic market, gold prices were up to Rs 30,330 per 10 gm while in the international market it moved above $1,300 to touch $1,305 briefly for the first time after January 2015 as the dollar index touched 11-month low level.

Gold, which has been consolidating around $1,250 levels, has been seeing some rally in the past four or five sessions.

The fresh upside in gold prices was supported by Bank of Japan’s decision to maintain status quo in its monetary policy.

“The market was speculating that the Bank will further cut its rates, which is already in the negative territory and it may further increase its bond-buying programme,” said Himanshu Gupta, senior research analyst, Karvy Comtrade.

Silver too gained and moved up past $18 per ounce during the intra-day trade. However, both silver and gold are unlikely to sustain the rally for long.

“The gold exchange traded funds, which have been instrumental in the rally in gold prices last quarter are not so active this quarter. The fundamentals are not strong enough to support the rally,’ said Gupta.

However, in the immediate short-term, prices can even move up to $1,320, from where they can slip towards $1,270 levels and consolidate for some time. In the case of silver also there is a stiff resistance at $18 per ounce. Prices can slip to $16 - $16.5 levels and consolidate before finding further direction.

Ahead of the scheduled European Union referendum on Britain’s exit on June 23rd, the market will witness speculations and this can further support gold in the coming months.

Bloomberg adds: Gold advanced above $1,300 an ounce for the first time since January 2015 on speculation central banks from the US to Europe will maintain low interest rates, spurring demand for the metal. The Federal Reserve policy makers last week left benchmark interest rates unchanged. This raises gold’s appeal as the metal generally gives investors returns only through price gains.

The Bloomberg dollar spot index touched the weakest since May 2015.

Investors have flooded back to precious metals this year as risks to the global economy prompted the Fed to signal it will take a slower approach to further interest-rate increases, weakening the dollar.

“We believe that there’s a lot of things that are ripe for precious metals right now: a low interest-rate environment, interest-rate expectations backing down again and we have a weaker dollar,” Chris Gaffney, president of EverBank World Markets in St. Louis, said in a telephone interview. “We believe this is just the start of a push higher for the precious metals.”

Gold futures for June delivery climbed 0.5 per cent to $1,296.80 an ounce at 10:07 am on the Comex in New York. Earlier, the price rose as much as 1.2 per cent to $1,306, the highest since Jan. 22, 2015. The precious metal has climbed 22 per cent this year. Markets in Asia and London were shut for holidays.