India: Impact of Selling in Global Markets Appeared on Gold Prices

Stacy Adams

Gold fell by Rs 148 in spot, fall in silver by Rs 886. The effect of selling in global markets appeared on gold prices.

Gold futures remained flat in Indian markets today despite positive global cues. Gold futures on MCX were marginally up by 0.06 per cent at Rs 46,830 per 10 grams, while silver futures were up 0.35 per cent at Rs 69,583 per kg. In the previous session, gold had lost 0.22 percent while silver had fallen by 1.5 percent.

Gold prices rise in global markets
Gold rates today remained high in global markets. Gold spot rose 0.2 percent to $ 1,809.17 an ounce. Among other precious metals, silver rose 0.4 per cent to $ 27.73 an ounce. Platinum rose 1.4 percent to $ 1,253.76, while palladium rose 0.4 percent to $ 2,360.69.

ETF flows reflect weak investor interest
The holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund or gold ETF, fell 0.4 per cent to 1,110.44 tonnes on Tuesday as against 1,115.4 tonnes on Monday. Gold ETFs are based on the prices of gold and its price also decreases with the subsequent fluctuations in its price. The flow of ETFs reflects weak investor interest in gold. A strong dollar makes gold more expensive for holders of other currencies.

Investment in gold ETFs increased rapidly in 2020
In the year 2020, gold-based exchange-traded funds (ETFs) increased as a safe investment. This led to a net investment of Rs 6,657 crore in Gold ETFs. Whereas in 2019 there was a net investment of only Rs 16 crore in gold ETFs. However, it had net purchases in 2019 after six consecutive years of net withdrawals. According to data from the Association of Mutual Funds in India, by the end of December 2020, the total assets under management of gold funds rose more than twice to Rs 14,174 crore from Rs 5,768 crore a year earlier. In 2020, gold emerged as one of the safest investments and best performing instruments for investors.

The exchange rate of the rupee strengthened by 11 paise against the dollar. ..

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