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The Indian gold market experienced a downturn on Wednesday, with prices dipping below the ₹79,000 mark per 10 grams. This decline, reported by the All India Sarafa Association, can be attributed to a confluence of factors, primarily subdued demand from stockists and retailers coupled with weakening global trends. The price of 99.9% pure gold fell by ₹150 to reach ₹78,850 per 10 grams, a significant drop from the previous day's closing price of ₹79,000. Similarly, 99.5% pure gold continued its downward trajectory for the third consecutive day, losing another ₹150 to settle at ₹78,450 per 10 grams. This consistent decline reflects a broader trend in the market, indicating a potential shift in investor sentiment or a period of market consolidation.
In contrast to the gold market's weakness, silver demonstrated a different trend. Silver prices experienced a surge of ₹100 per kg, closing at ₹92,500 per kg – a noticeable increase from the previous day's ₹92,400. This divergence in price movements between gold and silver highlights the complexities of the precious metals market and suggests that the influencing factors affecting each metal can vary significantly. The differing performances of gold and silver might also reflect differing investor perceptions of risk and hedging strategies, with some potentially favouring the relative stability of silver over the more volatile gold market in the current economic climate.
The futures market also mirrored the trend observed in physical gold trading. Gold futures contracts for February delivery on the Multi Commodity Exchange (MCX) experienced a decline of ₹93 (0.12%), trading at ₹76,810 per 10 grams. Similarly, silver futures contracts for March delivery fell by ₹322 (0.35%), settling at ₹91,875 per kg. These futures price movements indicate that market participants anticipate continued volatility in precious metal prices in the near term, reflecting uncertainty about future economic conditions and potential policy changes.
Global market dynamics played a significant role in shaping the Indian gold market's performance. Comex gold futures in the Asian market hours showed a decline of USD 4.90 per ounce (0.18%), reaching USD 2,663 per ounce. This global price drop influenced the domestic market, contributing to the downward pressure on gold prices in India. Analysts offered varied perspectives on the factors driving these trends. Saumil Gandhi of HDFC Securities highlighted that traders are cautiously evaluating recent political developments and the monetary policy outlook, while awaiting key upcoming US economic data releases. This cautious approach to trading suggests a degree of uncertainty and market hesitancy, preventing a significant price surge despite some geopolitical events.
Manav Modi from Motilal Oswal Financial Services provided further insight, noting that gold prices maintained a relatively steady trajectory after a slight increase the previous day. He attributed this to the conflicting signals from the US economy. Strong US jobs data implied a more cautious approach to rate cuts, while a softer dollar and easing Treasury yields countered this, limiting potential losses. Furthermore, Modi highlighted that geopolitical tensions, such as the situation in the Middle East and South Korea, led to some safe-haven buying, providing a degree of support to gold prices. Deveya Gaglani of Axis Securities echoed this sentiment, emphasizing that the safe-haven appeal of gold was supported by political uncertainties in South Korea and France, as well as ongoing geopolitical tensions in the Middle East and the Russo-Ukrainian war.
The upcoming comments from US Federal Reserve Chair Jerome Powell are expected to be closely watched by investors. His final scheduled public remarks before the central bank's last rate-setting meeting of the year will provide insights into the Fed's outlook on the economy and influence investor decisions. These comments, slated for later Wednesday, will give investors a clearer picture before a quiet period leading up to the Federal Open Market Committee's monetary policy meeting on December 17-18. The Fed's stance on interest rates significantly impacts the value of the dollar and ultimately, the price of gold, making Powell's comments highly influential in shaping market expectations and influencing gold price movements in the coming weeks.
Source: Gold slips below Rs 79,000 per 10 gm on reduced demand, global cues