U.S. drone attack sets gold price on fire

Rupee plunges to month-and-half low

January 03, 2020 09:33 pm | Updated 09:33 pm IST - MUMBAI

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.

Top News Today


Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.