Gold prices decline ₹5,000/10g: Is it good time to buy?
What's the story
Gold and silver prices witnessed a major fall on Friday. The decline was mainly due to hawkish comments from US Federal Reserve officials that have clouded expectations for a December rate cut. The end of the US government shutdown also diminished gold's safe-haven appeal. Experts believe this weakness in bullion may persist in the near term.
Price drop
Domestic gold prices hit ₹1,21,895 per 10g
Domestic gold prices plummeted by nearly ₹5,000 per 10g on Friday. The yellow metal hit a day's low of ₹1,21,895 in line with international market trends where it fell by $127 per troy ounce. Silver rates saw an even sharper decline of ₹8,700 per kg as the white metal hit a day's low of ₹1,53,729. On COMEX exchange too silver rate was down by 5.56% at around $50.21.
Market impact
Hawkish Fed comments cloud December rate cut prospects
The fall in gold and silver prices today was mainly due to hawkish comments from US Federal Reserve officials. These remarks have clouded the prospects for a December rate cut, which usually acts as a positive trigger for non-yielding gold. According to CME Group's FedWatch tool, traders now see a 49% probability of a quarter-point rate cut in December, down from 64% earlier this week.
Economic factors
End of US government shutdown affects gold's safe-haven appeal
The end of the US government's record 43-day shutdown, which had interrupted key economic data flows, also affected gold's safe-haven appeal. Anuj Gupta, Director at Ya Wealth Global Research, said these two developments have diminished the appeal of gold and silver. He expects weakness in bullion to continue in the near term. Jateen Trivedi from LKP Securities expects volatility in gold with a likely range between ₹1,24,000-₹1,27,500.