Gold Prices In India, Abroad Recover After US Fed Rate Cut

Domestic prices of gold stood at Rs 77,700 as of 7:05 a.m. on Friday, according to the Bullion Association. The prices have recovered by Rs 720, after slipping to Rs 76,980 on Thursday. Though the prices over a broader time period display a steady climb, the prices through the month of November have been fluctuating.

Prices of the commodity had been driven higher by demand in October, ahead of festivities. The run-up in prices went up to Rs 81,500 before it plunged to Rs 76,980 by the start of November.

The local demand had brought about a price rally that has not sustained to this month. The prices had fallen to Rs 67,800 after the customs duty on gold was cut to 6% during the Union Budget. Gold prices had comfortably held over the Rs 75,000-mark through October, and have been on a decline since Oct. 31.

The recovery of prices reflects on the futures prices of the commodity as well. The futures prices for Dec. 5 stood at Rs 77,430, according to the Multi Commodity Exchange.

Global prices after recovery from Election slump, stood at $2,700 per troy ounce, according to Bloomberg. The trigger for this recovery being the Fed reducing the interest rates by 25 basis-points earlier today.

This brings about a better outlook on the commodity as the lower interest rates has a direct impact on demand. Intended to boost liquidity into the system, the rate cuts will push the demand and prices of the yellow metal higher on an international scale.

The quarter percentage point rate cut positions the commodity prices for a recovery.

Silver prices stood at Rs 92,540 as of 7:05 a.m., according to the Bullion Association. The futures prices for Dec. 5 were at Rs 92,217, according to the MCX.