After the bumper rise of Dhanteras and Diwali, there has been a huge fall in the prices of gold and silver. According to Multi Commodity Exchange (MCX) data on Thursday morning, gold and silver prices have seen a decline of about 9 to 16 per cent from their all-time highs. On MCX, gold prices fell by Rs 11,779 to Rs 1,20,515 per 10 grams from the all-time high of Rs 1,32,294 per 10 grams. This is a decline of about 8.90 percent. At the same time, the price of silver on Multi Commodity Exchange (MCX) fell by Rs 26,596 from the all-time high of Rs 1,70,415 per kg to Rs 1,43,819. That means a decline of 15.60 percent was seen in silver. In the global market too, gold and silver prices declined by about 8.60% and 12.60% respectively.
Slight improvement in trade deal expectations
After two days of decline, there was a slight rise in the prices of gold and silver. Gold reached around $4,120 an ounce, while silver rose above $49 an ounce due to increased demand for safe haven investments. Despite sharp fall from all-time highs, gold and silver got some support on India-US trade deal hopes. A slight rise was seen in gold prices on MCX on Thursday morning amid reports of a trade agreement being signed between the two countries soon.
In early trade, December gold futures contracts on MCX were trading 0.89% higher at Rs 1,22,938 per 10 grams. Meanwhile, the December futures contract of silver was trading 0.93 per cent higher at Rs 1,46,915 per kg. According to analysts, gold prices on MCX for December expiry are expected to be in the range of Rs 1,21,500 to Rs 1,23,000 per 10 grams.
What factors are influencing this?
Trade and geopolitical tensions: Due to trade tensions between the US and China and ongoing political risks around the world, investors have started investing in gold and silver, which are considered safe investments. US-China and Russia issues: The US is considering new export restrictions on China. However, the proposed meeting between Trump and Xi Jinping offers some hope. Additionally, new US sanctions on Russia over the Ukraine conflict have raised geopolitical concerns. Expected cut in interest rates: The Federal Reserve is expected to cut interest rates twice more by the end of this year. When interest rates fall, investment in non-interest bearing assets like gold and silver increases.
What do experts say?
According to news agency IANS, analysts said, “After a lot of rally, gold prices have entered a new phase and are constantly in the headlines due to volatility, but on the other hand, they are also seeing ups and downs.” He added, “Gold is on track for its biggest annual gain since 1979, up 54% year-on-year, having broken key psychological resistance levels of $3,000 per troy ounce in March and $4,000 per troy ounce in October.”
However, gold prices declined due to a stronger US dollar in global markets as investors awaited US inflation data later this week. These data may influence the Federal Reserve’s next move on interest rates. In the global market, by 3:10 am (GMT), spot gold was down 0.2 per cent at $4,084.29 an ounce, while US gold futures for December delivery rose 0.9 per cent at $4,100.90 an ounce.