Gold Prices Surge Nearly 5% as Weaker Dollar Boosts Demand

New Delhi (IANS) - Gold prices surged nearly 5 per cent on a weekly basis due to a weaker US dollar and reduced expectations of an imminent Federal Reserve rate hike. On Friday, MCX gold futures (October) were flat while MCX silver futures for September advanced 1.28 per cent. The price of 10 grams of 24-carat gold stood at Rs 1,58,860 on Friday, up from Rs 1,54,066 seen on Monday at market opening.

The weaker US dollar and reduced expectations of near-term monetary tightening gave a boost to the precious metals market. Analysts said that softer US inflation, weaker retail activity, and subdued consumer sentiment from the previous week continued to temper expectations of near-term monetary tightening, with markets largely pricing out a September rate increase.

Additionally, a US Treasury announcement to double its long-dated bond buybacks pushed long yields of bonds lower. This, combined with softness in the US dollar, created a supportive backdrop for gold and silver. The price of MCX gold was at Rs 1,62,440 per kg, while MCX silver futures stood at Rs 2,46,360 per kg.

The Indian rupee eased nearly 0.3 per cent during the week as elevated crude prices increased India's import burden. However, the softer rupee provided additional support to MCX gold and silver by raising the domestic cost of imported bullion.