February 3 (Mint) – Gold prices edged higher in Indian markets today after a big fall over the previous two sessions. On MCX, gold futures rose 0.2% to ₹47,947 per 10 gram after slumping ₹1,800 in previous two sessions as the government cut import duty on the precious metal. Silver prices on MCX attempted to rebound, rising 1.5% or ₹1000 per kg to ₹68,577 per kg. In the previous session, silver had slumped 8% or ₹6000 amid sharp volatility in global rates.
In global markets, gold prices rose to $1,844.48 an ounce, up 0.4%, supported by a retreat in US dollar. Silver futures rose 3.2% today to $27.25 an ounce after 8% plunge in the previous session. Silver has been in the spotlight after posts on the WallStreetBets Reddit forum called for a “short squeeze”, with prices pushing higher as retail investors piled in. Analysts say that the social media-driven rally that started last week appears to have cooled off.
On Monday, the amount of silver traded in the London market surged to 1.006 billion ounces on Monday, three times the level typical in recent months. Amid the volatility in prices, CME Group on Monday raised margins on its COMEX 5000 Silver Futures by 17.9%. Meanwhile, US Treasury Secretary Janet Yellen has summoned U.S. financial regulators to discuss the recent market volatility.
In Budget 2021, unveiled on Monday, the government rationalised customs duty on gold/silver from effective rate of 12.88% to 10.75%, gold dore (unrefined gold) from 12.21% to 10.09% and silver dore from 11.33% to 9.21% and increased duty of synthetic and polished stones from 7.5% to 15%, HDFC Securities said in a note.
“The marginal increase in price of Jewelry due to duty hike in price of stones will be offset by sharp reduction in import duty on gold and silver. Will benefit the jewelry sector in the long run though marginal hit on inventory in the near term,” the brokerage said in a note.
Asian equity markets were mostly higher today, extending a global rally amid a cooling off of retail trading frenzy that fueled swings in heavily shorted shares in US markets.
Hopes for US President Joe Biden’ proposed $1.9 trillion COVID-19 aid bill were rekindled as Democrats in the Congress on Tuesday took the first steps toward advancing relief package without Republican support.
The Senate voted along party lines, with Democrats edging out Republicans 50-49, to open debate on a fiscal 2021 budget resolution with coronavirus aid spending instructions. Using this strategy unlocks a legislative tool needed for Democrats to enact Biden’s package in the face of Republican opposition.
Among other precious metals, platinum today gained 0.3% at $1,097.52 and palladium shed 0.1% to $2,240.49. (With Agency Inputs)