Gold Price Nears $2,700-Mark, MCX Rate Crosses Rs 77,400 As Russia-Ukraine Tensions Escalate
The Indian gold futures surged in view of the global headwinds, with the December contracts rising by 0.91% to trade at Rs 77,410 per 10 gram on the Multi Commodity Exchange.
Gold prices, which were hammered following the US presidential election, continued their recovery on Friday in the wake of fresh escalation in Russia-Ukraine tensions.
The precious metal edged closer to the $2,700-mark—a level last seen on Nov. 5, before Donald Trump's victory in the electoral race to the White House.
Spot gold was trading 1.03% higher at $2,696.35 an ounce at 8:15 a.m. (GMT). On the Comex, the US gold futures rose 0.89% to $2,698.7 per ounce.
The Indian gold futures also surged in view of the global headwinds, with the December contracts rising by 0.91% to trade at Rs 77,410 per 10 gram on the Multi Commodity Exchange at 1:47 p.m.
In the Indian retail market, 24-karat gold was trading 0.6% higher at Rs 77,406 per 10 gram, according to the India Bullion Jewellers Association Ltd.
The fresh climb in gold comes a day after Ukraine accused Russia of using a "new kind" of missile against its forces. The missile, which had all the parameters of an intercontinental ballistic missile, targeted the city of Dnipro, according to Ukrainian officials.
This came a couple of days after the Ukrainian forces reportedly used the US-made Army Tactical Missile System or ATACMS missiles to strike Russia near a border region. Russia, in retaliation to the alleged use of ATACMS missile, warned of a possible nuclear response if Kyiv continues to use advanced western missiles against it.
Gold Prices Off Post-US Election Lows
The climb in gold prices this week has led to the recovery of nearly three-fourth of the losses suffered since the US presidential election. The victory of Trump, who has promised import tariffs, led to a climb in US dollar and bond yields, which in-turn reduces the appeal of non-yielding assets like bullion.
This, in turn, damaged the prospects of gold, which slipped from a high of $2,750 an ounce on Nov. 5—a day before the elections—to below $2,550 an ounce in the global market last week. On the MCX, Indian gold futures slid from a high of Rs 79,181 per 10 gram on Nov. 5 to a low of Rs 73,995 per 10 gram on Nov. 14.
According to analysts, although, the dollar will determine the movement of gold in the short term, the metal will remain strong in the medium-term, owing to the major global conflicts.
"What is happening in the Middle East will continue to impact the price of gold. The tensions between Israel and Iran are at another orbit now as compared to months ago. And Russia and Ukraine tensions are also escalating. In this backdrop, gold will remain in demand," according to Kranthi Bathini, director at WealthMills Securities Pvt.
