Gold opens higher, up by Rs 110 in early trade; silver at Rs 62,100/kg

After a slight dip, gold price on Thursday increased by Rs 110 from the previous day's close, with 10 gram of 24-carat gold trading at Rs 52,040. Ten grams of 22-carat gold is trading at Rs 47,770.

Bullion is used as a hedge against inflation, but higher interest rates increase the opportunity cost of holding the non-yielding asset.

Meanwhile, silver also opened higher on Thursday, trading at Rs 62,100 per kg, after an increase of Rs 200.

The price of 10 gram of 24 carat gold in Delhi, Mumbai, Bangalore, Hyderabad, and Kolkata is Rs 52,040 for the day. The price of 10 gram of 22 carat gold in Delhi, Mumbai, Bangalore, Hyderabad, and Kolkata is Rs 47,700.

In Chennai, 10 gram of 24-carat and 22-carat gold is trading at Rs 52,100 and Rs 47,760 respectively on Wednesday.

India’s gold imports in May jumped 677 per cent from a year ago to the highest level in a year as correction in prices just before a key festival and wedding season boosted retail jewellery purchases, a government source said.

Higher imports by the world's second-biggest bullion consumer could support benchmark prices, but the surge could increase India's trade deficit and put pressure on rupee.

Meanwhile, the gold prices slipped on Wednesday as the dollar and US Treasury yields rallied in the run-up to the last inflation reading before this month's policy meeting of the Federal Reserve.

Spot gold fell 0.1 per cent to $1,850.10 per ounce by 1012 GMT, while US gold futures were flat at $1,851.90, the Reuters reported.

While gold is viewed as a hedge against inflation and a safe asset during political and economic uncertainties, higher interest rates increase the opportunity cost of holding the non-yielding asset.