Dollar strength weighs on gold price


A rebound in the US dollar index sent gold prices lower in the international markets after the European Central Bank failed to add any new monetary stimulus in the trading week between September 6 and 11.

According to the Federation of Nepal Gold and Silver Dealers’ Association (FeNeGoSiDA), gold was traded at Rs 96,100 per tola on Sunday and its rate was unchanged the next day. On Tuesday, gold price fell by Rs 300 a tola to Rs 95,800 per tola.

Bullion price went up over the next two days — by Rs 600 a tola to Rs 96,400 per tola on Wednesday and by Rs 400 a tola to Rs 96,800 per tola on Thursday. Its price, however, fell by Rs 300 a tola on Friday to settle at Rs 96,500 per tola for the week.

While gold price rose by Rs 400 a tola during the course of the review week, the price of the precious yellow metal went up by Rs 100 per tola compared to the previous week’s closing rate of Rs 96,400 a tola.

In India, the second-biggest buyer after China, demand took a further hit due to the start of ‘Shradh’, a two-week period considered inauspicious to buy gold and other assets.

While demand usually picks in the run up to October-November festival season, a worsening COV- ID-19 outbreak has hammered sentiment, with India’s economy shrinking by nearly a quarter in April to June, as per Reuters.

“Even during the festivals, demand will remain lower than usual due to higher prices,” a Mumbai-based dealer with a bullion importing bank told Reuters.

In China, demand remained weak with gold sold at $45 to $50 discounts, versus last week’s $56 level.

Meanwhile, as per the price rate of FeNeGoSiDA, silver was priced at Rs 1,320 per tola on Sunday in the domestic market. Its price remained the same on Monday but then fell by Rs 10 a tola to Rs 1,310 per tola on Tuesday.

Similar to bullion price, silver price went up on Wednesday and Thursday. The grey metal was traded at Rs 1,315 a tola on Wednesday, up five rupees per tola and at Rs 1,325 a tola on Thursday, up Rs 10 per tola. On Friday, silver price fell by Rs 15 a tola to close the week at Rs 1,310 per tola.

During the review week, silver price was down Rs 10 a tola, but its price was steady compared to the closing rate of Rs 1,310 per tola of the past week.

Looking ahead to next week, analysts say that market sentiment will depend on the latest action from the Federal Reserve as it holds its monetary policy meeting.

This will be the first meeting for the US central bank after the committee announced its new inflation target for an average two per cent.

A version of this article appears in e-paper on September 13, 2020, of The Himalayan Times.