Gold prices in India jumped on Thursday, November 5, after the US midterm elections. In Bangalore, gold prices rose by ₹2,490, or 1.73%, reaching ₹1,46,120 per 10 grams. Silver also gained, increasing by ₹2,810, or 1.49%, to ₹1,90,830 per kg, according to Bullion.com.
Key Details
The increase in gold prices is linked to a weaker US dollar and falling US Treasury yields. This followed the Democratic Party winning majorities in both the Senate and House of Representatives. Spot gold rose 1.9% to $4,134.83 per ounce, its highest level since October 22. US gold futures for December delivery increased 1.8% to $4,144.20 per ounce. Analysts pointed out that a lower dollar makes gold cheaper for buyers using other currencies. Linh Tran, a market analyst at XS.com, said, "If investment flows and yield movements continue to provide support, gold could stabilize above $4,000, opening up an opportunity for a recovery toward $4,200, followed by $4,400."
Background
Jewelry stocks also gained from the rise in gold prices. Shares of Motisons Jewellers increased 3.9% to ₹15.55, while Senco Gold rose 3.7% to ₹322.65. Other notable gains included PC Jeweller and Titan, which both rose 2.3% to ₹4,858.90. The broader Indian stock market reacted positively, with the Sensex climbing 2% to an intraday high of 78,922.44.
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The rise in gold prices is expected to affect the jewelry sector and related stocks. Higher gold prices usually lead to increased production costs. Investors will be watching for the upcoming US nonfarm payrolls report on Friday to assess the Federal Reserve's monetary policy outlook.
Based on reporting by: livemint.com, businesstimes.com.sg