Gold and Silver Prices Plummet Amidst Profit Booking and Weak Global Trends
New Delhi- The gold market witnessed a significant downturn as prices plummeted by Rs 14,000 per 10 grams, with silver prices also experiencing a sharp decline of Rs 20,000 per kilogram in the national capital on Friday. This sudden drop in prices was attributed to investors booking heavy profits amidst weak global trends and a rebound in the US dollar.
Market experts revealed that gold of 99.9 per cent purity saw a steep decline of Rs 14,000, marking a 7.65 per cent decrease, to reach Rs 1,69,000 per 10 grams (inclusive of all taxes). Just the day before, the precious metal had reached an all-time high of Rs 1,83,000 per 10 grams after a notable surge of Rs 12,000.
Silver prices also took a hit, dropping by Rs 20,000, nearly 5 per cent, to Rs 3,84,500 per kilogram (inclusive of all taxes). The white metal had soared to a record high of Rs 4,04,500 per kg in the preceding market session, with a significant increase of Rs 19,500.
“Gold and silver experienced a significant correction on Friday as investors moved to aggressively book profits following a recent record-breaking rally. This decline was mainly fuelled by the heavy liquidation of long positions by large institutional players, who sought to secure gains after a strong multi-session advance,” stated Saumil Gandhi, Senior Analyst – Commodities at HDFC Securities.
Gandhi added that a recovery in the US dollar further intensified pressure on bullion. “From a technical standpoint, both gold and silver had been trading in overbought territory over the past several sessions, heightening the risk of a corrective move.”
The combination of stretched technical conditions, institutional profit-taking, and a continuing recovery in the US dollar adds further pressure on bullion in the short term, as per Gandhi’s analysis.
In the international market, spot gold witnessed a 5.31 per cent decrease, equivalent to USD 285.30, to reach USD 5,087.73 per ounce. The yellow metal tumbled by 7.92 per cent, dropping by USD 425.86, hitting an intraday low of USD 4,945.26 per ounce.
“Gold slipped below USD 5,100 per ounce and silver dipped below USD 105 per ounce amidst continued profit-taking, as Trump and Senate Democrats reached a tentative deal to avoid a US government shutdown, impacting safe-haven assets,” explained Kaynat Chainwala, AVP Commodity Research at Kotak Securities.
On Thursday, gold had reached a new record of USD 5,595.02 before settling at USD 5,371.12 per ounce.
Spot silver also witnessed a drop of USD 14, marking a 12.09 per cent decrease, to USD 101.47 per ounce after falling as much as 17.5 per cent in intraday trade to USD 95.26 per ounce in the overseas market. The previous day, it had hit a fresh peak of USD 121.45 per ounce.
“A few factors have contributed to the sharp correction in gold and silver prices. Following the rapid increase in the prices of both precious metals, global profit booking seems to be taking place,” mentioned Vijay Kuppa, Chief Executive Officer at InCred Money.
Kuppa also highlighted the uncertainty surrounding President Donald Trump’s nomination of Kevin Warsh as the next head of America’s central bank, the Federal Reserve. This uncertainty has kept the market in a slightly risk-off mode, as there are concerns that the new leadership may adopt a more hawkish approach.
“The US Treasuries and the Dollar index showed a slight upward movement, generally perceived as negative for metals,” Kuppa added.
