When trading opened for the month, the gold rate in India was recorded holding at Rs.38,300 per 10 grams on 1 December 2019 with the safe-haven asset continuing its poor run from the previous session.
The last month of November witnessed gold performing at its lowest level since June with investors gravitating towards riskier assets such as equities and stocks amid the positive developments, though uncertain, in the US-China trade negotiations.
With the US dollar index gaining ground against a basket of other major emerging currencies, and the equity markets performing well, demand for the precious metal subdued and gold prices in India remained untouched at Rs.38,300 per 10 grams on 2 December 2019.
Also, with the release of a stronger-than-expected Chinese factory data, hopes of positive economic growth resulted in investors and market participants banking on riskier assets. This led to gold rates slipping by Rs.100 to Rs.38,200 per 10 grams on 3 December 2019.
However, with the US President Donald Trump slapping new tariffs on Brazillian and Argentinian imports, market concerns the around global trade picked up. This led to investors hedging on safe-haven assets such as the bullion the next day.
Strong investor demand, coupled with positive market trends overseas led to gold prices surging by Rs.400 to Rs.38,600 per 10 grams on 4 December 2019. This was also the highest recorded figure during the week.
The safe-haven demand, however, took a hit soon after a report mentioning progress on the Sino-US trade deal negotiations was release. This increased the risk appetite for investors, capping the gains on bullion.
Subdued demand compounded by weak global cues led to gold rates in India inching down to Rs.38,300 – an Rs.300 decline in price – per 10 grams on 6 December 2019.
The next couple of days saw investor appetite for riskier asset surging as China waived tariffs on some US imports, stoking hopes around the international trade.
Also, with market participants and investors refraining from making purchases ahead of the US employment data, gold price in India dropped further towards the end of the week.
24K gold in India saw rates plummeting by Rs.200 to Rs.38,100 per 10 grams on 7 December 2019 and continued trading at the same price for the remainder of the week.
For any clarifications/feedback on the topic, please contact the writer at viswanathan.v@cleartax.in
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