US officials and Chinese authorities were discussing the resolution of trade issues and the market was expecting a resolution. However, in a sudden announcement, the US announced 10 per cent tariff on import of goods worth $300 billion. Soon after,
Anuj Gupta, deputy vice-president research of commodities & forex, Angel Broking, said "Gold October contract breached 36,000 levels on the MCX on the back of safe havens; buying due to more trade tarriffs imposed on China by the US. However, selloff in the equity market and depreciation in the exchange rate of the rupee against the dollar was also supportive for bullion. We feel gold may touch $1,460 to $1,480 and on MCX Rs 6,700 to Rs 37,000 very soon. Open interest has been increased significantly in the Rs 36,500 and Rs 37,000 call option series, which also suggests the positive trend.
MCX futures also saw a wide spread in the August and October contract, which is expiring on Monday . The spread is Rs 750 with the October futures being high. Sources said that big players in the bullion value chain had sold and intended to give delivery. Till Friday afternoon, 3.4 tonnes of gold was still to be delivered and Monday is the last day for settlement. Some improvement in spot market prices are likely to help smoothen settlement.
Meanwhile, in Mumbai spot market at Zaveri Bazar, the standard gold price on Friday closed 2.3 per cent or Rs 789 higher at Rs 35,271 per 10 grams, a fresh all-time high.
The Indian market has been trading in discount since past one month but today discount has widened from around $20-25 per ounce or Rs.500/ per 10 gram to more than $30-$ or Rs.700-800 per 10 gram. Demand at this stage is not coming and following a sudden spurt in price, customers are preparing to stay put, jewelers say. They maintain that demand is very less while selling of old gold which was otherwise high has also slowed in last few days.
In fact, gold imported unofficially has been selling in Mumbai around Rs 34700 per 10 gram, which is Rs.500 lower than official gold. Unofficial gold is also keeping prices under check.