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Gold prices rise amid a commodity slump: What this means for the economy

ET Wealth analyses the impact of rising gold prices and a slump in commodity prices on the Indian economy and different sectors.

, ET Bureau|
Updated: Aug 26, 2019, 10.31 AM IST
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Due to slowdown in the auto sector, domestic aluminium prices will remain under pressure.
While global economic chaos has hit industrial commodity prices, bullion is on a roll over hopes of a stimulus by central bankers.

ET Wealth analyses the impact these developments are likely to have on our economy and different sectors.

Bloomberg commodity index is trading close to 30-yr lows
Bloomberg Commodity-index
Commodities are under pressure due to fears of a global recession. This may continue for some years.

While industrial metals have crashed, bullion has gained due to stimulus by central banks
Due to a weak rupee, domestic prices of gold are expected to continue rising in the coming years.

International gold at 6-yr high; domestic gold still higher
In uncertain times like this, it is good to have around 10-15% of your portfolio in gold.

Silver did not participate in recent bullion rally
After the gold-silver ratio reached an unsustainable level of 90, silver has started outperforming gold.

Crude oil prices have not dived due to production cuts
Softening crude oil will reduce infl ation and will allow RBI to cut rates more.

Chinese efforts stopped copper from falling to a 3-year low
Domestic copper prices will continue to be under pressure due to slowdown in the auto sector.

A production glut is bringing down steel prices
Domestic steel prices will be under increased pressure due to slowdown in infra related sectors.

Natural gas prices are close to their 10-year low
Low international prices will help rein in domestic gas prices.

Fall in aluminium prices has been restricted
Due to slowdown in the auto sector, domestic aluminium prices will remain under pressure.

Funds linked to commodities other than gold are in the red

Investors should stay away from non-bullion commodity funds now.

Also Read

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Gold rate today: Gold eases amid improving global sentiment

Gold Rate Today: Gold, silver shine on safe haven demand

Gold rate today: Gold gains as Moody's downgrades outlook on India

Gold Rate Today: Gold, silver edge lower on rise in risk appetite

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