Gold prices rose in domestic futures trade on Tuesday, August 11, tracking gains in global bullion prices as investors increased safe-haven buying ahead of key US inflation data. On the Multi Commodity Exchange , gold futures for October delivery rose ₹1,501, or 0.98%, to ₹1.54 lakh per 10 grams.
The contract traded with a turnover of 1,332 lots. Silver, however, moved lower. MCX silver futures for September delivery fell 0.16% to ₹2.36 lakh per kg. The domestic gold market followed the broader global trend. Gold futures in New York rose 0.35% to $4,406.15 an ounce, while spot gold was around $4,409.81 an ounce, according to the commodity commentary.
Why are gold prices rising? Gold has extended its gains for a third consecutive session and climbed to its highest level in more than two months in global markets. Investors have increased buying of the precious metal ahead of the US consumer price inflation data due on Wednesday .
The data could provide fresh clues about the Federal Reserve's interest-rate outlook. Weaker US jobs data for July has already led markets to reassess the outlook for monetary policy. Lower interest rates generally support gold because the metal does not generate interest income.
Domestic futures also received support from fresh positions built by market participants, analysts said. China boosts gold demandGold has also received support from central-bank buying. According to Prithviraj Kothari, managing director of RiddiSiddhi Bullions and president of the India Bullion and Jewellers Association, China's central bank added around 20 tonnes of gold to its reserves in July, marking its largest monthly addition since October 2023.
Continued central-bank purchases can provide underlying support to bullion prices by adding to investment demand. What could drive gold prices next? The immediate trigger for global and domestic gold prices will be the US CPI data, followed by producer price inflation data later this week.
Markets will assess whether the inflation numbers strengthen or weaken expectations around the Fed's future rate decisions. Any fresh geopolitical developments, particularly those involving Iran and the Strait of Hormuz, could also influence safe-haven demand and commodity prices.
For Indian investors, movements in the rupee against the US dollar will also remain important. A weaker rupee can increase the landed cost of internationally priced gold and amplify domestic price gains, while a stronger rupee can have the opposite effect.
Silver underperforms goldSilver has not matched gold's gains in domestic futures trade. Globally, however, silver remained positive, supported by investor sentiment and industrial demand. The metal was around $64.10 an ounce in spot trade. Kothari said silver's move above $63 an ounce could open the possibility of a move towards $70-$71 an ounce, although actual price movements will depend on global demand, interest rates, the dollar and broader market conditions.-With Reuters inputs