Gold is a safe-haven asset which has fallen in price in India, and at a steep rate at that. Prices that have been dropping in the major cities over the last few days have dropped anywhere between Rs 1,000 to Rs 6,500 per 10 grams and this has raised concerns among investors, jewellers, and at the bullion market.
Since the price of the 24-carat gold has dropped to Rs 1,01,520 per 10 grams in Delhi, after touching higher levels earlier, to Rs 91,450 in other markets, the decrease has been witnessed as the geopolitical tensions have cooled down, global trading patterns have transformed, and safe havens demand has declined. The world trends reveal an ambivalent picture since there are markets where the prices are increasing and markets where they are decreasing, and hence many questions arise on where the market is next.
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Quick Summary
- Prices of gold in India have fallen drastically by an amount of Rs 1,000 to Rs 6,500 per 10 gram in various regions.
- Safe-haven purchases have been diminished by concerns of global trade war and relaxation of geopolitical tensions.
- There has been an additional pressure due to a global sell-off in commodities and strengthening of the US dollar.
- Prices have been affected by domestic reasons like slow demand of jewellery and slowdown in the festival season.
- Analysts have more downsides as some opine that a correction at Rs 56,000 per 10 grams may be witnessed in the near future.
Main Content
1. The recent movements of prices
- The price of 24-carat gold in Delhi came down by Rs 1,000, selling at Rs 1,01,520 a 10-gram unit.
- The prices in other parts are still lower as Rs 91,450 is the price reported in heavy selling.
- The price is more than six-and-a-half thousand rupees less in comparison with the all-time peak earlier this year.
- This drop is one of the most sharp short-time adjustments in months
- Expensive prices killing jewellery business: The retail market has slumped strongly, at least in the non-wedding and non-festival business.
- Pressure on the rural demand: Slower economy in rural areas is affecting the purchases in tier-2 and tier-3 cities.
Why are gold prices falling despite global uncertainty?
In recent weeks, geopolitical and trade tensions have eased, reducing safe-haven demand. Combined with a strong US dollar and profit booking, this has led to lower prices.
Will gold prices fall further in India?
Short-term corrections are possible, especially if US interest rates remain elevated and demand continues to weaken domestically. Some experts see potential support at Rs 95,000 and a possible downside to Rs 56,000 in an extreme case.
Is it a good time to buy gold now?
For long-term investors, price dips can be buying opportunities. However, traders should be cautious as short-term volatility remains high.
Why is there a difference between global and Indian gold prices?
Import duties, taxes, currency exchange rates, and seasonal demand differences can cause domestic prices to deviate from international trends.
How will jewellery demand be affected?
Lower prices could encourage some buyers to return, but unless the fall is sustained, many may wait for further declines before making large purchases.
Conclusion
The recent Rs 1,0006,500 decline in the prices of gold in India is a major trigger to the investors and jewellery sector. Although this fall is being driven by geopolitics and a stronger dollar, as well as less safe-haven demand, domestic factors are also at play, with weaker retail purchases taking their toll.
In the future, the gold market would most likely stay volatile, as both global and local signals will begin to drive the prices. The present decline could be taken as a chance by the long-term investors, whereas short-term traders would be advised to exercise caution. As usual, it will be necessary to keep a watch on international trends, as well as local demand patterns that will help to predict the next big move in gold.
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