Gold prices increased on the MCX on Thursday as US Treasury yields declined significantly and the dollar stayed weak following an unexpected liquidity support announcement by the US Treasury. Gold futures for October delivery on the MCX increased by Rs 447 per 10 grams, reaching Rs 1,58,443 on Thursday morning. December contracts surged past Rs 1.6 lakh per 10 grams, whereas February contracts were observed trading above Rs 1.62 lakh per 10 grams. In the international market, gold remained close to its peak in over two months on Thursday following an unexpected liquidity support announcement from the US Treasury, which resulted in lower yields and a weaker dollar. Spot gold surged to $4,526 per ounce, marking the peak level since June 2.
This occurred as US Treasury yields declined, driven by heightened demand after the Treasury Department announced it would double the scale of liquidity support buyback operations for longer-dated notes and bonds. The US dollar, meanwhile, exhibited a muted performance, rendering metals priced in the American greenback more affordable for purchasers holding alternative currencies. Higher crude prices and ongoing uncertainty following the conclusion of the US-Iran MOU, which ended without new discussions, contributed to a cautious sentiment for gold in the previous session, according to Jateen Trivedi.
He observed that the Strait of Hormuz continues to be a significant geopolitical catalyst, while market participants will also monitor the FOMC meeting minutes, US employment figures, and fluctuations in crude for additional guidance. “Gold is likely to remain volatile as geopolitical developments continue to drive safe-haven demand,” the analyst stated. The recent pullback in gold prices may have created an opportunity for investors to gradually accumulate the yellow metal, as noted by Jefferies’ Global Head of Equity Strategy Christopher Wood and billionaire hedge fund manager John Paulson. Both believe the precious metal may be entering the initial phase of a prolonged bull market.
Paulson, who shifted his focus to gold in 2009 following a highly lucrative wager against subprime mortgages, stated in an interview that the demand for gold may persist in its upward trajectory as trust in paper currencies diminishes. “As people lose faith in paper currencies, gold as an alternative will continue to grow,” Paulson said. “Gold is becoming the most apt reserve currency in the world, replacing fiat currencies,” Paulson said. “The demand from central banks, for instance, has continued to grow, as has the private sector.” Wood, in his Greed and Fear report, said investors should begin accumulating gold and gold mining stocks again after an extended pause.
