Gold and silver prices continue to fall heavily due to global cues. A huge fall was seen in the prices of gold and silver on MCX yesterday. Gold fell by more than ₹3,000, while silver also fell by ₹3,000. This decline was due to weakness in global markets. Expectations of easing trade tensions between the US and China and a stronger US dollar also contributed to the sharp decline in the prices of these metals.
Fall in prices on MCX
On Tuesday, gold opened 0.7% lower at ₹1,20,106 per 10 grams on the Multi Commodity Exchange (MCX). Silver also fell 0.69% to ₹1,42,366 per kg. At market close, gold was trading 2.06% lower at ₹1,18,461 per 10 grams, while silver fell 1.36% to ₹1,41,424 per kg. A slight increase is being seen in the prices of gold and silver today.
According to MCX, gold’s record high was more than ₹1.32 lakh, which has now dropped to ₹1.18 lakh. As a result, gold prices have fallen by more than ₹13,000 from their record high. Silver has fallen to ₹1.41 lakh per kg from its record high of ₹1.70 lakh per kg. As a result, silver prices have fallen by nearly ₹29,000 from their record high.
Why are the prices of gold and silver falling?
The fall comes after two months of strong gains and is due to profit-booking by traders. Rahul Kalantri, Vice President (Commodities), Mehta Equities Ltd, said that after two months of strong rally, gold and silver prices remained under heavy selling pressure as both the metals fell below key psychological levels. Gold has reached $4,000 and silver has reached $47 per ounce. The decline was driven by a stronger dollar index and renewed optimism over US trade talks with China and India.
Rapidly changing geopolitical concerns over Gaza peace talks have also reduced demand for safe-haven assets, experts said. However, he also said that the weaker rupee was providing some support to bullion prices at lower levels. Kalantri said that globally, gold has found support around $3,940-3,905, while resistance lies around $4,055-4,100.
Central banks look
Investors are keeping an eye on interest rate cuts by central banks. Following recent weak inflation data, the US Federal Reserve is expected to announce a 25 basis point cut in interest rates, while the European Central Bank and the Bank of Japan are likely to maintain their current policies. If this happens, the prices of gold and silver may fall further.
Signs of further decline in the short term
Darshan Desai, CEO of Aspect Bullion & Refinery, said the near-term trend depends on how trade talks and policy announcements proceed. He said gold prices continued to fall due to weak demand for safe haven investments amid expectations of a possible US-China trade agreement and a stronger US dollar. He said prices may fluctuate in the short term. He further said that if the Federal Reserve signals a lower interest rate cut than expected, it could put further pressure on gold prices.
