Gold glitters amid doubts
Trump’s US debt limit deal, N Korea tensions push people towards yellow metal
Pune/London: Gold clawed higher internationally on Thursday after US President Donald Trump agreed to a deal with Democrats to temporarily extend the US debt limit, weakening the dollar. Continuing tensions with North Korea over its nuclear tests provided further support for safe-haven gold.
However, this has not deterred Indians from purchasing gold. Elaborating on the trend, Saurabh Gadgil from PNG Jewellers said, “People are still ready to buy gold despite the rising prices.
People tend to invest in gold when prices are rising. A report published in January/February had predicted that gold prices would reach about USD 1,400 by the end of the year. We are certainly moving in that direction as the current price is USD 1,340 per ounce.”
On Wednesday, Trump forged a surprising deal to provide government funding until December 15, averting a crisis over the debt ceiling. Gold initially fell in response to the deal, but got support on Thursday as investors digested the implications of the deal. “We see that strangely playing out in the dollar,” said Jonathan Butler, commodities analyst at Mitsubishi in London.
Fears of a debt default had boosted the dollar through safe haven buying, but once that concern was lifted, those flows reversed and gold prices strengthened, Butler said.
Explaining the reason behind the trend of purchasing gold when priaces are rising, Gadgil said, “Internationally, there is a lot of fear around oil prices and the US dollar. People tend to invest in the stock market, but in such cases of crisis, people know that the stock market collapses and so they tend to invest in tangible things. Due to this, the gold market continues to remain bullish.”
“The odds of geopolitical tensions escalating further are very high. If North Korea does another missile test, it will trigger risk-off trade and the yellow metal could benefit,” said Naeem Aslam, chief market analyst, Think Markets, London.
Speaking about the demand for gold in Pune, Gadgil said, “The market was closed for two days due to Ganeshotsav, but since the market resumed on Thursday a high demand has been visible. While many are investing in gold, many are making bookings for the upcoming festive season.”
(With inputs from Reuters)