Gold prices in India declined sharply by Rs 600 to close at Rs 99,020 per 10 grams on Friday, pressured by increased selling from stockists and a stronger U.S. dollar. The rise in U.S. Treasury yields following robust macroeconomic data diminished market expectations of an imminent Federal Reserve interest rate cut, thereby weighing on the safe-haven appeal of gold. Similarly, silver prices also fell by Rs 1,000 to Rs 1,04,800 per kilogram. Investors now await the upcoming U.S. Personal Consumption Expenditures (PCE) inflation report, which could significantly influence the trajectory of precious metals.
Domestic Gold Market Dynamics
On Friday, the national capital witnessed a notable decline in gold prices, with 99.9 percent purity gold dropping Rs 600 to Rs 99,020 per 10 grams. The previous session had seen gold settle at Rs 99,620 per 10 grams. Similarly, gold of 99.5 percent purity slipped Rs 500 to Rs 98,500 per 10 grams, down from Rs 99,000 in the prior close, inclusive of all applicable taxes.
This downturn was primarily driven by fresh selling activities by stockists, reflecting cautious sentiment amid shifting global economic signals.
Global Economic Factors Impacting Gold
The depreciation in domestic gold prices mirrors broader global influences. The U.S. dollar strengthened as recent economic data outperformed expectations, prompting a rise in U.S. Treasury yields. This development undercut investor appetite for gold, traditionally viewed as a safe haven during periods of uncertainty.
Saumil Gandhi, Senior Analyst at HDFC Securities, elaborated that stronger U.S. macroeconomic figures have lessened the likelihood of the Federal Reserve easing interest rates in the near term. "This dynamic exerts downward pressure on gold prices," Gandhi noted.
Silver Prices Mirror Gold’s Downward Trend
Silver prices similarly experienced a significant fall, declining by Rs 1,000 to Rs 1,04,800 per kilogram on Friday. The previous day’s closing stood at Rs 1,05,800 per kilogram, inclusive of all taxes. This parallel decline underscores the close correlation between the two precious metals, both sensitive to changes in global monetary policy and currency fluctuations.
International Market Overview and Outlook
Internationally, spot gold prices edged up marginally to USD 1,334.45 per ounce, indicating some resilience amid the volatile environment. However, market participants remain vigilant ahead of the U.S. Personal Consumption Expenditures (PCE) inflation report, a key gauge of inflation that could heavily influence Federal Reserve policy decisions.
Chintan Mehta, CEO of Abans Financial Services, highlighted the pivotal role of the upcoming data, stating, "A stronger than expected PCE reading could revive inflation concerns, thereby boosting demand for safe-haven assets such as gold. Conversely, a softer inflation print might rekindle optimism for rate cuts, potentially lifting gold prices further."
Conclusion
The recent retreat in gold and silver prices in the Indian market is symptomatic of broader macroeconomic developments in the United States, particularly rising Treasury yields and a resilient dollar. With global markets eyeing the forthcoming PCE inflation data, precious metals remain vulnerable to policy-driven volatility. Investors and analysts alike will be closely monitoring these indicators to recalibrate their strategies in a fluid economic landscape.
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