After reaching yesterday's record high, the gold prices in the national capital plummeted steeply on Friday, by Rs 700, to close at Rs 88,750 per 10 grams. The plunge in the prices was largely due to the weaker demand from jewellers and the stockists, the All India Sarafa Association added.
On Thursday, 99.9% purity gold went to all-time high at Rs 89,450 per 10 grams. However, in a divergence from the trend, the metal went down as the market mood weakened. 99.5% purity gold also went down by Rs 700, to end at Rs 88,350 per 10 grams. The reasons for the downfall, the merchants attributed to poor demand and poor global trends.
It wasn’t just gold under pressure—silver also dropped. Silver in the local market declined by Rs 300 to Rs 1 lakh a kg. The rout extended to the futures market, and gold futures in the month of April on MCX also dropped by Rs 225, bringing them to Rs 85,799 a 10 grams.
Jateen Trivedi, VP-Research Analyst – Commodities and Currencies, at LKP Securities, opined that the gold remained in limbo throughout the day. "At the MCX, the gold fluctuated between Rs 85,900 and Rs 85,400. The rupee's weakness, however, helped sustain the prices above Rs 85,350 despite the steady dollar index," he added.
Market watchers are looking to future economic numbers in the domain of manufacture, services, and residential sales, and how they are likely to influence the trend in gold in the later session. Silver futures March also declined, losing by Rs 283 to Rs 96,830 per kg at MCX.
Global Trends Impacts Gold and Silver
The downward trend also spilled into local markets. The futures in gold in the month of April went down by USD 11.19, bringing the price to USD 2,944.91 an ounce. Spot gold also went down by USD 8.42 (or 0.29%) to USD 2,930.56 an ounce.
"Gold prices retreated from record highs last Friday after the profit-taking by the traders after a long run in the precious metals market," Saumil Gandhi, Commodities Senior Analyst at HDFC Securities, stated. He also noted that the latest utterances by the officials at the Federal Reserve, and the minutes from the latest FOMC meeting, only added to the caution by the central bank in cutting the interest rate because of the inflationary concerns. This, in turn, induced some profit-taking in the gold.
Silver didn’t behave any differently in the world market. The futures in silver also declined in the Asia session, at about USD 33.65 an ounce.
Adding to the market jitteriness, there were also the reports the Trump administration could ease the sanctions against Russia during negotiations to put an end to the conflict in the Ukrainian conflict. The introduction of political issues into the picture means the bullion prices could see further volatility in the near future. While gold and silver have enjoyed a spectacular run in the past few weeks, the current downturn serves to reinforce the volatility in the market in the precious metals. Whether the pullback is just a blip and the start of a wider downturn, only the future holds the answer, but what's clear is the observation that the investor community is closely monitoring global economic trends and developments in the political world before making the next move.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It does not constitute legal, financial, or professional advice.
Source: www.financialexpress.com
