The yellow metal prices increased on Friday after a five-day fall. However, the gains were muted. On Multi Commodity Exchange, gold futures boosted by 0.26% and settled at Rs 48,749 per 10 gram. Meanwhile, silver futures rose by 1.5% and touched Rs 68,639 per kg following overnight gains in global markets.
Significantly, in the previous session, the yellow metal had dropped 0.55% while the silver had climbed 1.8%. In India, gold prices are down nearly 3%, which equals Rs 1,500 so far this year, tracking a similar decline in global rates.
Furthermore, in global markets, gold prices were flat. However, it is heading for a monthly fall. Traders were watching on developments around the U.S. stimulus package. Spot gold was steady at $1,840.91 per ounce. It set for a nearly 3% decline for the month. Gold has been pressurized this month amid a stronger dollar and concerns that U.S. stimulus package could linger.
After rising 4.5% on Thursday, silver prices declined by 0.7% to $26.18 an ounce. Meanwhile, the U.S. dollar boosted by 0.28% versus a basket of other currencies, making gold expensive for other currencies holders. The U.S. dollar index, which gauges the dollar against a basket of six currencies, has increased 0.8% for the month, supported by higher U.S. Treasury yields. Higher yields on bonds make the yellow metal a less attractive investment as it pays no interest.
India’s gold demand declined by 35% to 446.4 tonnes in 2020
Moreover, gold ETF investors continued to remain on the sidelines. Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, dropped 0.4% on January 28.
The rate of 10 gram 22-carat gold in Mumbai was Rs 44,871, while 24-carat 10 gram was Rs 48,986. The 18-carat gold stood at Rs 36,740 in the retail market.
According to the World Gold Council, India’s gold demand declined by 35% to 446.4 tonnes in 2020, while in 2019 it stood at 690.4 tonnes.
Furthermore, the World Gold Council added that global gold demand in 2020 declined to its lowest in 11 years. India’s gold demand fell by over a third in 2020 on the back of pandemic-induced lockdowns and lifetime high prices. Still, a recovery this year is most likely, as normalcy returns and steady reforms strengthen the industry. In August gold prices had reached a record high of Rs 56,200 in India.
Additionally, it is essential to mention that Central Bank buying slowed sharply in 2020, particularly in the second half of the year.