Markets

U.S. drone attack sets gold price on fire

Rupee plunges to month-and-half low

The impact of the U.S. drone strike killing a top Iranian military commander was visible in most market segments in India as gold prices spiked, while equities fell, and the rupee plunged to a one-and-a-half-month low.

While gold prices in the spot market surged by around ₹1,000 per 10 gm on Friday, rupee fell by 42 paise to end at 71.80 against the U.S. dollar amid a spike in crude prices. Equities, however, managed to recoup some of the losses as the benchmark Sensex closed at 41,464.61, down 162.03 points, or 0.39%.

Bullion market participants expect prices of gold to touch ₹45,000 per 10 gm in the near future, even as spot prices jumped by more than ₹1,000 per 10 gm on Friday to touch ₹41,000 in Mumbai’s Zaveri Bazaar.

“Fresh geopolitical tensions will affect international gold prices, which in turn, would push [up] the prices here,” said Kumar Jain, vice-president, Mumbai Jewellers Association.

Gold prices on the London Bullion Market Association (LBMA) jumped to nearly $1,530 per ounce on Friday after trading below $1,500 for most part of December.

“On Friday, spot prices in Mumbai jumped to touch ₹41,000 but very soon it could cross ₹45,000 as currency weakens and concerns rise,” said Akhilesh Mehta, proprietor, AR Plus, a jewellery store in Zaveri Bazaar, adding that people, however, are still buying gold as a further rise in prices is expected.

Equities recover

Equities did not see an across-the-board sell off as the benchmark Sensex, which dipped to an intra-day low of 41,348.68, settled the day at 41,464.61, down 162.03 points or 0.39%.

The overall market breadth was only marginally negative as 1,300 stocks lost ground on the BSE, against 1,213 gainers. The broader Nifty closed at 12,226.65, down 55.55 points or 0.45%.

“News of fresh tension between U.S. and Iran triggered a gap-down start and the benchmark gradually drifted lower as the day progressed,” said Ajit Mishra, vice-president, Research, Religare Broking, adding the resilience on the broader front helped the market breadth to settle on a flat note. Foreign portfolio investors continued to be buyers in Indian equities, with Friday’s net purchases pegged at ₹1,263 crore.

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Printable version | Feb 23, 2020 8:15:58 AM | https://www.thehindu.com/business/markets/us-drone-attack-sets-gold-price-on-fire/article30472736.ece

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