Gold prices in India witnessed a significant rally on Friday, climbing sharply on the back of strong international trends and a weakening Indian rupee. The precious metal's appeal as a safe-haven asset was bolstered by these combined factors, leading to a notable increase in domestic rates.
Domestic Market Sees Sharp Upward Move
In the national capital, the price of 24-carat gold surged by Rs 670 to reach Rs 1,32,200 per 10 grams. This marked a substantial single-day gain for investors and consumers. Silver, often moving in tandem with gold, also experienced a strong uptick. The price of silver jumped by Rs 1,100 to settle at Rs 80,900 per kilogram.
The trading activity on the Multi Commodity Exchange (MCX) reflected this bullish sentiment. The June gold futures contract was trading higher by 0.44 per cent, or Rs 304, at Rs 69,500 per 10 grams. This futures market movement is a key indicator of trader expectations and often influences physical market trends.
Global Cues and Currency Dynamics Fuel the Rally
The primary driver for the domestic price increase was a firm trend in the international markets. Globally, spot gold was trading higher at USD 2,342.30 per ounce. This global strength directly feeds into Indian prices, as the country is a major importer of the metal.
Compounding the impact of high global prices was the performance of the Indian rupee. The domestic currency depreciated by 7 paise to close at 83.53 against the US dollar. A weaker rupee makes dollar-denominated imports like gold more expensive, adding another layer of cost pressure for Indian buyers. This dual effect of strong global benchmarks and local currency weakness created a perfect storm for rising prices.
Market Outlook and Influencing Factors
Analysts point to several factors sustaining the momentum in gold markets. The metal's traditional role as a hedge against economic uncertainty continues to attract investors. Movements in the US dollar and Treasury yields, along with geopolitical tensions, are closely watched by traders as they can swiftly alter gold's trajectory.
The significant price movement on Friday underscores the sensitivity of the Indian gold market to external financial currents. For retail buyers, jewellers, and investors, this highlights the importance of monitoring both international commodity trends and foreign exchange rates to understand domestic price directions. The current environment suggests that volatility may persist, keeping market participants on alert for their next move.
