Gold prices spiked in India today while silver rallied, supported by a falling dollar index. On MCX, gold prices rose 0.9 percent to near a nine-month high. $54,745 per 10g while silver increased by 2.3% to $69,065 a kilogram. The dollar index fell to 103.66 today after an unexpected policy adjustment by the Bank of Japan. The yen strengthened as the Bank of Japan said it would let benchmark bond yields rise further. Spot gold rose 1.1% to $1,806.34 an ounce while spot silver rose 3.3% to $23.71 an ounce.
Global stock markets saw a second round of sell-offs in response to the Fed’s hawkish policy last week. Reports of growing disruptions due to the Covid outbreak in China also affected investor sentiment. The S&P 500 closed at its lowest level in more than a month on Monday.
“Gold found strong support at $1,770 for the past two sessions and climbed above $1,805 on Comex, helping the MCX gold scale to break through. $54800 on Tuesday afternoon, as the dollar index dipped below 103.75. Prices reacted positively to recession fears as markets underperformed and safe-haven buying was witnessed. The golden range can be seen $54250-55250 in MCX in the future,” said Jateen Trivedi, Vice President of Research Analytics at LKP Securities.
Meanwhile in India, the issue price for the next tranche of the 2022-23 Sovereign Gold Bond Program, which will open for registration in five days from Monday, has been fixed at a flat rate. $5,409 per gram of gold. 2022-23 Sovereign Gold Bond Program – Phase III will be open for registration from December 19–23, 2022
“The nominal value of the bond… works out to be $5,409 per gram of gold,” the RBI said.
“The price for the third tranche of SGB (2022-23) is fixed at $5409/gram. The main purpose behind issuing these bonds is to make them an alternative to investing in physical gold. Meeting physical gold demand leads to imports, which puts pressure on the currency. SGB is an effective alternative to physical gold, it is paper gold. Any investor can invest in gold without any hassle of storage or associated costs, liquidating it is easier than physical gold and the reward is a 2.5% coupon paid semi-annually. Nish Bhatt, Founder & CEO, said the same is not true of physical gold.
“RBI has received a good response from SGB, it has raised more than total $31,000 crore since its establishment in November 2015 according to the annual report. The price of gold is up more than 11% this year and has more than doubled since November 2015.”
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