Gold prices in India are available at a premium of ₹3,000 per 10 grams over international prices, the highest in a decade. On Monday (July 29), gold prices in India were close to ₹70,000 per 10 grams.

The premium is the extra cost above the international gold price that buyers in India have to pay.

In this case, Indian buyers are paying ₹3,000 more per 10 grams than the equivalent international price after converting it to Indian Rupees.

The government’s recent decision to cut import duties initially lowered gold prices to their lowest in nearly four months.

This move ignited a surge in demand, pushing prices back up.

The gold prices went down to ₹68,510 per 10 grams by end of 23 July 2024 – the day of budget announcements, and then went to hit a low of ₹67,462 per  10 grams the next day.

Global market dynamics

Globally, gold prices increased on Monday due to geopolitical tensions and economic uncertainties.

The rise was driven by tensions in the Middle East and expectations of a potential US interest rate cut in September.

Investors are also focused on the Federal Reserve’s policy meeting later this week.

Spot gold rose 0.3% to $2,391.80 per ounce as of 0205 GMT.

US gold futures increased by 0.4% to $2,390.50 per ounce.

“Prices will hold a range ahead of the Fed meeting and Chair Jerome Powell’s comments. If we get a clearly dovish stance and softer jobs data, prices could head towards $2,450 per ounce, ” Kelvin Wong, OANDA’s senior market analyst for Asia Pacific, was quoted as saying in  Reuters report.

The US Federal Open Market Committee meets on July 30-31 and is expected to keep rates unchanged at 5.25%-5.50%.

However, softer US jobs data in June and comments from top Fed officials have led the rate futures market to fully price in a 25 basis-point cut in September.

The ADP national employment report and non-farm payrolls report, due this week, are key data points for the market.

Gold, known for its stability during geopolitical and economic instability, tends to do well in a low-interest-rate environment.

Market outlook

Rahul Kalantri, VP of Commodities at Mehta Equities, said, “Gold has support at $2,378-$2,362 per ounce and resistance at $2,412-$2,428 per ounce. In India, gold has support at ₹67,980-₹67,750 per 10 grams and resistance at  ₹68,380 per 10 grams-₹68,550 per 10 grams.”

Gold prices will continue to be influenced by domestic policies, international markets, and geopolitical events.

Investors and consumers must closely watch these developments.