Why Are Gold Prices Falling to This Month's Lowest Level?
Why Are Gold Prices Falling to This Month's Lowest Level?

Gold prices have witnessed a significant drop, touching their lowest point this month. The precious metal, which fell by Rs 350 to Rs 59,650 per 10 grams in the national capital on Wednesday, continued its downward trend on Thursday. Investors and experts are pondering the reasons behind this sudden decline in gold prices.

Factors Contributing to the Decline

1. US Retail Inflation Acceleration

One of the primary factors contributing to the recent dip in gold prices is the acceleration of retail inflation in the United States. While the inflation rate was lower than anticipated, it has raised the possibility of another interest rate hike by the Federal Reserve. This has left the financial community speculating whether the Fed will implement this rate hike in its upcoming monetary policy meeting.

2. Physical Gold Prices in Indian Cities

In India, the physical price of gold in major cities like Delhi and Ahmedabad currently hovers around Rs 59,700 per 10 grams. Additionally, the price of silver stands at approximately Rs 72,500 per kilogram, according to a report by ET (Economic Times).

3. Expert Insights

Navneet Damani, Senior Vice-President of commodity research at Motilal Oswal Financial Services, commented on the decline in gold prices. He noted that gold has reached a more than two-week low due to increasing yields and investor positioning in anticipation of the US inflation data. This data is expected to provide insights into whether the Federal Reserve will proceed with interest rate hikes later this year.

Current Gold and Silver Prices

As of the latest updates:

  • MCX October gold futures are trading at Rs 58,548 per 10 grams on the MCX, down by Rs 45 or 0.08% from the previous day's closing price.
  • December Silver futures are priced at Rs 71,160 per kilogram, up by Rs 259 or 0.61%.

On the international front:

  • Comex Gold futures are trading at $1,934 per troy ounce, marking a decrease of $1.10 or 0.06%.
  • Silver futures on Comex are priced at $23.215, reflecting an increase of $0.187 or 0.800%.

Previous Day's Closings

In the previous day's trading:

  • October Gold futures on MCX ended with a decline of Rs 31 or 0.05% per 10 grams, closing at Rs 58,595.
  • December Silver futures on MCX closed lower at Rs 71,410, down by Rs 524 per kilogram or 0.73%.

The downward trend in gold prices raises questions about the future trajectory of this precious metal and its implications for investors and the broader economy.

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