In the last one week, gold fought hard as it inched forward even while facing headwinds to claw its way from around $1,545 per ounce to Rs.1,560.1 per ounce (London pm fixed on 20th January). Finally, the yellow metal succumbed to the headwinds and declined to end the day in London at $1,551.3 per ounce (London pm fix). However, the yellow metal had a roller-coaster ride on Tuesday as it vacillated between $1,545 and $1,560 per ounce in New York trading. But in Asian trading, gold was in the $1,545-$1,568 per ounce region.
Probably, the rockets fired into the US embassy at Baghdad late on Monday night propelled gold towards the higher end of the range. But, IMF predictions of global economy down marginally to 2.9% for 2019 and the sharp revision of Indian GDP from 6.1% to $4.8% along with the Chinese GDP numbers at its lowest in at least two decades saw the yellow metal in a free fall. The likely decline in purchasing power in the two biggest physical markets aided the sharp decline. As a result, the tensions in the middle-east, Libya and Iraq (US-Iran conflict), quickly went into oblivion. The Bank of Japan’s stance of no change in monetary policy too was neutral for gold. However, the yellow metal recovered strongly in New York trading as news of the Chinese `virus’ spreading across borders saw gold end higher in the $1,557-1,558 per ounce region. But, in early morning Asian trading on the 22nd the yellow metal was last seen in the $1,553-54 per ounce region. Gold has a tumultuous day ahead.
As mentioned earlier in these write ups, the Indian gold price has a correlation of almost 1, gold prices in Mumbai followed the international trends. Gold opened higher at Rs.40,274 per 10 gms but declined sharply to end lower at Rs.40,014 per 10 gms. Silver too followed the same pattern and declined sharply to end at Rs.46,410 per kg. In the domestic markets too, both the precious metals face strong headwinds.