Gold Prices Drop: 3 Key Reasons Behind the Rs 450 Decline You Should Know
On September 4, 2024, gold prices in India experienced a significant decline, dropping by Rs 450 to Rs 73,600 per 10 grams in the national capital. This marks the third consecutive session of losses for the precious metal, reflecting a broader trend influenced by international market dynamics and domestic demand fluctuations. In the previous session, gold of 99.9% purity had closed at Rs 74,050 per 10 grams, highlighting a notable downward trajectory in recent days.
Current Market Overview
The recent slump in gold prices is attributed to a combination of factors, including reduced demand from jewelers and retail buyers, as well as adverse influences from global markets. The All India Sarafa Association reported that silver prices also plummeted by Rs 1,650, settling at Rs 83,600 per kilogram, down from Rs 85,250 per kg in the previous close. For gold of 99.5% purity, prices dropped similarly by Rs 450, now priced at Rs 73,700 per 10 grams.
Global Influences on Gold Prices
In the international markets, gold was trading at USD 2,519.80 per ounce, down by 0.13%. Analysts suggest that the decline in gold prices is closely linked to disappointing US manufacturing data released earlier in the week, which triggered a sell-off across various financial asset classes. Saumil Gandhi, a Senior Analyst at HDFC Securities, noted that the gloomy market sentiment was exacerbated by this data, leading to a cautious trading environment.
Kaynat Chainwala, AVP of Commodity Research at Kotak Securities, highlighted that the strength of the US dollar, profit-taking, and position adjustments ahead of significant US economic data releases contributed to the decline in gold prices. Traders are currently navigating a narrow trading range, awaiting US jobs data due on Friday, which is expected to provide fresh insights into the Federal Reserve’s potential path for interest rate cuts.
Market Sentiment and Future Outlook
Despite the recent dip in prices, experts suggest that gold is still on track for its best year since 2020. Prathamesh Mallya, DVP of Research at Angel One, mentioned that ongoing geopolitical concerns, particularly in the Middle East, and expectations of US rate cuts are likely to underpin gold’s value in the long term. The market is closely monitoring upcoming US job openings data and the Fed’s Beige Book, which will provide further clarity on economic conditions and potential monetary policy adjustments.
Maneesh Sharma, AVP of Commodities & Currencies at Anand Rathi Shares and Stock Brokers, pointed out that while geopolitical risks and anticipated interest rate cuts may support gold prices, the immediate market reaction remains cautious. The interplay of these factors is crucial for traders as they assess the direction of bullion prices in the coming weeks.
