Gold slides to ₹1.48 lakh per 10g in Delhi amid weak demand

Gold Prices Decline to ₹1.48 Lakh per 10g Amid Weak Demand and Global Trends

Gold prices have slipped to a one-week low as local demand weakens and global market trends exert downward pressure on the precious metal.

Weak Domestic Demand Drives Price Drop

Gold prices in the national capital have continued their downward trajectory, closing at ₹1,48,900 per 10 grams on Wednesday. This marks a decline from ₹1,49,600 the previous day, driven by weak local demand and unfavorable global market conditions. According to Saumil Gandhi, Senior Analyst – Commodities at HDFC Securities, the current market sentiment is heavily influenced by subdued retail interest, which has been compounded by a recent rebound in crude oil prices due to geopolitical tensions in West Asia.

Global Market Influences and Currency Fluctuations

In the international markets, spot gold has also seen a significant decline, dropping by $47.42, or 1.14%, to $4,116.55 per ounce. This decline is attributed to a stronger dollar, which is nearing an 18-month high, limiting gold’s upside potential. The anticipation of the US Federal Reserve’s meeting minutes, which could provide insights into future interest rate adjustments, is further contributing to the cautious sentiment among investors. As December rate hike odds remain at 70%, the market is bracing for potential shifts in monetary policy that could impact gold prices.

RBI’s Interest Rate Hike and Inflation Concerns

The Reserve Bank of India’s recent decision to raise its benchmark interest rate by 25 basis points to 5.50% is another critical factor influencing gold prices. This marks the first increase in nearly four years and indicates a shift towards a ‘calibrated tightening’ approach to manage rising inflation and currency depreciation. Radhika Piplani, Chief Economist at Motilal Oswal Financial Services Ltd, suggests that further tightening is anticipated, with expectations of an additional 75 basis points increase in the current cycle, including a likely 25 basis points hike in December. Such measures could further dampen demand for gold as higher interest rates typically lead to increased opportunity costs for holding non-yielding assets like gold.

Market Outlook and Investor Considerations

As gold prices continue to face downward pressure, investors are advised to closely monitor both domestic demand trends and global market developments. The interplay between currency fluctuations, interest rate expectations, and geopolitical tensions will be crucial in determining the future trajectory of gold prices. With silver prices remaining stable at ₹2.27 lakh per kilogram, the precious metals market is poised for potential volatility as investors navigate these complex dynamics.

Key Highlights

• Gold prices in Delhi fell to ₹1.48 lakh per 10 grams, a decline of ₹700.
• Weak domestic demand and global market trends are influencing the price drop.
• Spot gold prices in international markets decreased by 1.14% to $4,116.55 per ounce.
• The RBI raised its benchmark interest rate to 5.50%, signaling potential further hikes.
• Investors are advised to monitor interest rate trends and geopolitical developments closely.

Investor Note: The recent decline in gold prices underscores the importance of staying informed about global economic indicators and domestic demand trends. Investors should consider these factors when making decisions related to gold investments.