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The Indian precious metals market experienced a mixed day on Tuesday, with gold prices experiencing a slight decline while silver prices saw a significant increase. According to the All India Sarafa Association, gold prices in the national capital fell by Rs 100 per 10 grams, settling at Rs 78,600. This marks a decrease from the previous day's closing price of Rs 78,700. The price of 99.5% purity gold also experienced a similar dip, falling by Rs 100 to Rs 78,200 per 10 grams. This fluctuation in gold prices stands in contrast to the movement observed in silver markets. Silver prices, on the other hand, showed a substantial increase, jumping by Rs 500 per kg to reach Rs 90,500. This represents a notable rise from the previous day's closing price of Rs 90,000 per kg. The divergence in price movements between gold and silver highlights the complexities and independent dynamics within the precious metals market.
The futures market for precious metals also reflected some of these trends, although not perfectly mirroring the spot market movements. On the Multi Commodity Exchange (MCX), gold futures contracts for February delivery showed a slight increase of Rs 35 (0.05%), closing at Rs 76,179 per 10 grams. This suggests a degree of optimism among some traders regarding future gold prices. Conversely, silver futures contracts for March delivery experienced a small decrease of Rs 87 (0.1%), settling at Rs 89,031 per kg. The disparity between the spot and futures markets indicates that market sentiment is not uniformly bullish or bearish across all segments of the precious metals market, and different factors may be influencing short-term and long-term price expectations.
Several analysts have offered perspectives on the factors contributing to these price movements. Pranav Mer, Vice President of Commodity & Currency Research at JM Financial Services Ltd, attributed the relatively stable gold trading to a quiet trading session influenced by the holiday period. He noted that while prices were consolidating after last week's fall, they remained impacted by a stronger US dollar in the international market. This points to the significant influence of global currency trends on precious metal prices. Saumil Gandhi, Senior Analyst of Commodities at HDFC Securities, echoed the sentiment of a quieter trading week leading up to Christmas. He highlighted the recent recovery in the US dollar as a headwind for precious metals, implying that a stronger dollar tends to negatively affect the demand and thus the price of gold and silver.
Praveen Singh, Associate VP of Fundamental Currencies and Commodities at Mirae Asset Sharekhan, also commented on the situation, emphasizing that gold trading is currently in a consolidation phase due to thin liquidity conditions. This suggests that the market is characterized by a lack of significant buying or selling pressure. Singh further pointed out that market participants are anticipating upcoming US economic data, such as the Philadelphia Fed non-manufacturing and Richmond manufacturing indices, which are expected to provide further insights into the future direction of gold and silver prices. This underscores the importance of macroeconomic indicators in shaping the outlook for precious metals markets.
The global picture also paints a somewhat mixed picture. Comex gold futures traded almost flat at USD 2,628.30 per ounce, reinforcing the notion of a consolidation phase in the international market. However, Comex silver futures showed a slight decline of 0.13%, reaching USD 30.15 per ounce. These movements in the global markets mirror the fluctuations observed in the domestic Indian markets, highlighting the interconnectedness of international and domestic precious metals trading. The interplay of global economic factors, currency fluctuations, and holiday-thin trading volumes all play a role in shaping the price dynamics of gold and silver in India and globally. Future price movements will likely depend on various factors, including global economic conditions, US economic data, and the overall strength of the US dollar against other major currencies.
Source: Gold falls Rs 100 to Rs 78,600 per 10 grams; silver jumps Rs 500