MUMBAI: Gold prices touched an all-time high on Tuesday with prices of yellow metal crossing Rs 57,000 for the first time in the futures market. Gold futures rose to Rs 57,050 per 10 gram on MCX. Gold prices have risen nearly 4 % so far in 2023, tracking gains in the overseas market and weakness in the dollar index.
“Gold prices have inverse correlation with the dollar index. The index has fallen nearly 15% in the past three months, which has pushed up the prices of gold,” Renisha Chainani, head - research, Augmont- Gold For All- a gold trading and research platform, told the newspaper.
“The combination of slower global growth, niggling inflation and deglobalisation ensures gold will return as a safe diversifier in times of escalating uncertainty,” she added. The US dollar index is the value of the US dollar relative to a basket of six major currencies.
A rise in index value denotes that the dollar is gaining against its counterparts and a fall in index value denotes a depreciation in the dollar’s value. Going forward, this interplay between inflation and central bank intervention will be key in determining the outlook for 2023 and the yellow metal’s performance.
Deteriorating outlook for global economy has also fueled the demand of yellow metal, which is considered as a safe haven in uncertain times. Fear of recession has also pushed up the prices of gold. The investment demand has also surged with central banks continue to add gold to their reserves.
Central bank purchases of bullion hit a record in the third quarter of 2022 at almost 400 tonnes. China joined the league by adding 62 tonnes of gold in the last quarter of 2022. Experts expect gold prices to rally further in the coming months. “Gold prices are expected to rise 5% in the next three months, which means gold may trade around Rs 60,000 per 10 gram. By the end of 2023, I expect the gold prices to reach around 65000 per 10 gram,” said Chainani.
Gold prices rise nearly 4% so far in 2023
Gold futures rose to Rs 57,050 per 10 gram on MCX. Gold prices have risen nearly 4 % so far in 2023, tracking gains in the overseas market and weakness in the dollar index