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Gold Takes a Tumble: An English Perspective
A Decline Amid Global Shifts
Gold prices in New Delhi have dropped for the second week running. The decline is primarily due to improved global risk appetite and a stronger dollar. On the Multi Commodity Exchange (MCX), gold futures for December delivery fell by ₹2,219, or 1.8%, over the past week.
Both global and domestic markets experienced a noticeable correction, breaking a nine-week rally. This was influenced by easing geopolitical tensions, a stronger US dollar, and profit-booking by investors.
Market Movements and Influences
During the previous week, the yellow metal hit an intra-day low of ₹1,17,628 per 10 grams on October 28. Sneha Jain, Investment Manager on Smallcase and Founder and CEO of WealthTrust Capital Services, noted that profit-booking pushed global gold prices down. Prices tested the USD 4,000 an ounce level before recovering modestly in the latter half of the week.
The MCX gold futures saw high volatility, with prices dropping from highs above ₹1,23,000 per 10 grams to a low of nearly ₹1,18,000, before rebounding to around ₹1,21,500.
Dollar Dynamics and International Trends
The strength of the US dollar added to gold’s decline. The US dollar index surged following the Federal Reserve’s comments, making dollar-priced gold more expensive for foreign buyers. This, alongside rising bond yields, made non-yielding bullion less attractive. As a result, Comex gold futures for December delivery fell by USD 141.3, or 3.41%, during the week, settling at USD 3,996.5 per ounce.
Rupee’s Role and Profit-Taking
Interestingly, the rupee was relatively stable but showed a weakening bias against the dollar. This made gold imports more expensive, providing a slight cushion that prevented Indian prices from falling drastically compared to global counterparts. Gold had touched fresh highs early in October before profit-taking caused a decline.
Sandip Raichura, CEO of Retail Broking & Distribution at PL Capital, observed that the past week’s events were mostly negative for gold. He mentioned easing tensions between Russia and Ukraine and positive Trump-Xi talks as key factors.
Silver’s Fortunes: A Rollercoaster Week
Silver, which performed impressively during the recent rally, experienced significant volatility. It staged a mild recovery towards week’s end. On the MCX, silver futures for December delivery ended a two-week losing streak by rising ₹817, or 0.55%.
Insights and Future Outlook
In overseas markets, Comex silver futures remained largely flat, concluding at USD 48.16 per ounce. N S Ramaswamy from Ventura commented on Fed Chair Jerome Powell’s remarks. These remarks suggested that future rate cuts would depend on macroeconomic data, thereby moderating the metals rally.
Central Banks and Gold’s Long-Term Prospects
Analysts foresee that continued accumulation by global central banks might drive the yellow metal to record highs. Western sanctions have spurred central banks to move away from the dollar. Moreover, soaring US debt, fiscal deficits, and the government shutdown have bolstered gold’s role as a haven amidst weakening US fundamentals.
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