MCX Gold futures surged amid supportive global cues and a continued slide in the Indian Rupee also triggered a sharp push to the commodity in local markets. The Indian Rupee fell to 68.40 against the US dollar – the weakest level against the greenback since November 2016. Rupee fell on poor trend in local shares. The local stocks declined sharply as the barometer index, the S&P BSE Sensex, fell 306.33 points or 0.88% to 34,344.91, as per the provisional closing data. Global stocks also fell as investors continued to assess potential trade tensions, the possible cancellation of a June summit with North Korea and a fall in commodity prices. This fall in INR pushed up the local Gold futures well above Rs 31000 per 10 grams.
In a key release for Gold, the minutes of the most recent meeting, the Federal Reserve continues to project two more rate hikes are on the way this year with three more on the way for 2019. There was no interest rate hike at the May meeting, but policy makers debated the threat of inflation and acknowledged trade-related uncertainties. The minutes also revealed little concern about inflation, suggesting the Fed will maintain its gradual approach to raising rates.
The MCX Gold futures ended at Rs 31187 per 10 grams, up 0.25% on the day after hitting highs near Rs 31400 levels. COMEX Gold is currently trading at $ 1294, up 0.40% on the day. COMEX Gold has tested a five month low before edging up and needs to break above $ 1300 for a sustained upmove as fund buying is unlikely to kick in given the current price environment for the yellow metal. Worries over domestic demand remain in place. Indias Gold imports stood at Rs 16930.91 crore in April 2018, recording a slide of nearly 32% over year.