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The price of gold in India experienced a significant decline on Friday, dropping by Rs 1,150 to settle at Rs 80,050 per 10 grams. This downward trend was attributed to a combination of factors, including sluggish demand from local jewelers and retailers, as well as a weakening trend in global gold markets. The All India Sarafa Association, a prominent industry body, reported these price fluctuations, highlighting the impact of market sentiment on precious metal values.
Silver, another key precious metal, also faced selling pressure, falling below the Rs 1 lakh mark. Prices dipped by Rs 2,000 to close at Rs 99,000 per kg, marking a decline from the previous day's closing price of Rs 1.01 lakh per kg. The decline in silver prices mirrored the downturn in the gold market, suggesting a broader trend of investor caution and subdued demand across precious metals.
Analysts cited various reasons for the decline in gold prices. Tepid demand from jewelers and retailers in the local markets indicated a lack of consumer enthusiasm, contributing to the downward pressure on prices. Additionally, a weak trend in international markets further amplified the downward movement. This global weakness reflected broader economic uncertainties and concerns about future interest rate decisions by central banks.
Futures trading on the Multi Commodity Exchange (MCX) also reflected the bearish trend in the precious metal market. Gold contracts for December delivery declined by Rs 406, or 0.52 per cent, settling at Rs 77,921 per 10 grams. Similarly, silver contracts for December delivery plummeted by Rs 1,134, or 1.17 per cent, to close at Rs 95,898 per kg.
The global gold market also witnessed downward pressure. Comex gold futures, a significant benchmark for international gold prices, fell by USD 15.90 per ounce, or 0.58 per cent, to settle at USD 2,733 per ounce. This decline was partially attributed to recent US macroeconomic data, which fueled speculation about a less aggressive rate-cutting cycle by the US Federal Reserve. A resilient labor market, evidenced by a second consecutive week of declining unemployment claims, and strong private sector momentum, reflected in a rise in the S&P PMI, contributed to this sentiment.
Despite the downward pressure, some experts noted that the decline in gold prices was partially capped by factors such as the safe haven demand for the metal and expectations of an uptick in Indian retail demand during upcoming festive seasons. Praveen Singh, an Associate VP at Sharekhan by BNP Paribas, pointed out that gold's decline was a delayed reaction to US economic data released the previous day. He also highlighted the lack of concrete details regarding alternative payment systems at the recent BRICS summit as a contributing factor to gold's weakness.
Silver also experienced a decline in the global market. It traded 1.39 per cent lower at USD 33.33 per ounce in Asian market hours. However, some analysts remained optimistic about the outlook for both gold and silver in the longer term. Pranav Mer, Vice President at JM Financial Services, suggested that the metals could close the week on a positive note, supported by factors such as safe haven demand, ETF buying, uncertainty surrounding the US presidential elections, and expectations of aggressive rate cuts from global central banks.
Source: Gold Drops Rs 1,150 to Rs 80,050 Per 10 Grams; Silver Declines Rs 2,000