Calculate your SIP ReturnsExplore

Gold Future Crosses 60000 Mark on MCX for the First Time

23 August 20235 mins read by Angel One
Good news for those who have got gold in their list of assets as the gold price hits record high! Read on to know more about the latest trends in gold prices and their causes.
Gold Future Crosses 60000 Mark on MCX for the First Time
ShareShare on 1Share on 2Share on 3Share on 4Share on 5

What can be viewed as a 21st century ‘gold rush’, multiple dips in the stock market in the last few years have caused investors to run towards gold as a safe investment avenue again and again. Be it the 2020 covid crash, the Russian invasion of Ukraine or the recent collapse of the Silicon Valley Bank (SVB) and its negative impact on other US banks – gold, and even silver, seems to be a safe haven of choice for the average investor.

Why the recent rise in gold prices

The crisis in the banking sector of the USA and fear of the spillover effects in international markets has been the main cause behind the  recent surge in gold prices in India and the world. 

For investors, the failure of the SVB bank, the fall in bond prices due to increased interest rates and also the uncertainty with respect to the value of the dollar (projected by a dip in the dollar index) are all generating a mass of negativity. Therefore, in a slight panic, they try to park their money in a safe asset like gold, even though it may not give as high returns as equity in the long run.

This is because gold is considered a safe haven for investors who are sensing that they might face capital loss due to a major economic event. Why safe haven? Because gold is a commodity that is not easily affected by the volatilities in the various markets in the equity, debt or even currency segments. Therefore, even when the stock markets are crashing, the price of gold may stay robust, or as seen recently, even increase.

The latest prices

Gold owners were in for a pleasant surprise while tracking the gold price today. On Monday noon, old prices first crossed Rs. 60,000 to reach Rs. 60,100 per 10 grams. Eventually the MCX Gold futures touched Rs. 60,280 at around 12:55 pm, thus experiencing an increase of Rs. 897 or 1.51%. 

One could note that MCX silver prices also rose up to Rs. 69,100 per kg at 1:23 pm, which is an increase of Rs. 599 or 0.87%.

Is it good time to invest in gold

The Federal Reserve Bank is expected to convene this week on March 22nd on the matter of the banking sector crisis in the USA – the decisions announced on this day will further impact the price of gold and silver globally. If the solution to the banking crisis is robust, especially involving government intervention, then the price of gold may correct. However, if the government decides to dwell in inaction and indecision, letting the crisis deepen, then gold prices may shoot up even further than it has already gone. In this context, we must also remember that the US government has shown reluctance to give a federal bailout to the SVB bank despite the expanding crisis across banks.

There are talks among market experts on if the price of the yellow metal will reach beyond Rs. 61,000 and similarly, if the price of silver will also increase to Rs. 70,000. Investors may thus choose to buy gold and silver at support levels right now in order to reap any possible benefits in the coming days.

Gold had previously seen a major jump in prices last year with the invasion of Ukraine by Russia, signalling investors predicting a fall in share prices across exchanges.

Gold as a commodity

Gold as a commodity enjoys demand in the form of jewellery, especially in India and China – it is considered as a form of gift. Elsewhere, like in the west it is considered to be both a gift as well as a form of investment – it is thus also stored in the form of gold bars or coins and traded in exchanges.

Because of its aforementioned characteristic as a safe haven, it is often used by hedgers as a form of security for their portfolio for times of crisis. Because gold is denominated in US dollars, holding gold can act as a hedge against the decline of the value of the dollar – hence the aforementioned reaction to a fall in the dollar index.

Most importantly, unlike other commodities in the exchanges, gold has a higher amount of liquidity and is thus a preferred commodity investment. During periods of inflation or instability, gold becomes the preferred commodity to find safety in.

Final words

If you enjoyed reading this story, follow Angel One’s blogs for more such inputs on the market. Open demat account today with Angel One, India’s trusted broker.

Open Free Demat Account!

Enjoy Zero Brokerage on Equity Delivery

Join our 2 Cr+ happy customers

Enjoy Zero Brokerage on Equity Delivery
Enjoy Zero Brokerage on Equity Delivery

Get the link to download the App

Send App Link

Enjoy Zero Brokerage on
Equity Delivery