Gold MCX rises past Rs 72,000 on Powell's rate stance, festive demand hopes

As the festive season approaches, the demand for gold is being projected to stay robust after the recent, sizeable cut in import duty.

Gold prices on MCX have inched past Rs 72,000 per 10 grams on August 26 as US Dollar weakened after Fed chair Jerome Powell indicated at a September rate cut.

Powell has on Friday almost endorsed an imminent start to rate cuts, sending the dollar near its lowest in 13 months and gold prices higher. The unrest in the Middle East too has added to gold's uptrend, taking it to new record highs this month. So far this year, bullion prices have staged one of the strongest rallies among major commodities. Earlier this year, there was a significant amount of central bank-led buying, which propelled gold prices higher.

“The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks,” Powell said on Friday at the Kansas City Fed’s annual conference in Jackson Hole, Wyoming.

Prices of other precious metals such as silver, platinum and palladium too are holding higher, with Spot gold holding above $2500, just shy of the record high of $2,531.60 hit last week.
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So far this year, gold has rallied by over 20 percent. Goldman Sachs has in April said that international gold prices could test the $2,700 an ounce mark. Lower interest rates typically are a positive for non-interest bearing bullion. This is the first month when gold prices have tested the $2500 mark.

As the festive season approaches, the demand for gold is being projected to stay robust after the recent, sizeable cut in import duty. The demand for gold has improved since the duty cut, Ajoy Chawla, CEO of Jewellery division at Titan told Reuters.