Losing Sheen! Gold slides 3% within a fortnight
The biggest fall has been witnessed on Wednesday, when prices have fallen by 1 per cent as the international prices of the yellow metal has fallen below $2000 per ounce due to stronger than expected US inflation report that reduced the prospects of an early interest rate cut by the Federal Reserve. The price fall continued on Thursday and Friday too with prices falling further to Rs 61,300 per 10 gm on MCX.
Gold prices have fallen by 3 per cent to Rs 61,400 per 10 gm within a fortnight from Rs 63,400 per 10 gm on February 1. This has turned the consumer sentiment positive and jewellers are witnessing good footfalls with demand rising by 20 - 25 per cent over last month.The biggest fall has been witnessed on Wednesday, when prices have fallen by 1 per cent as the international prices of the yellow metal has fallen below $2000 per ounce due to stronger than expected US inflation report that reduced the prospects of an early interest rate cut by the Federal Reserve. The price fall continued on Thursday and Friday too with prices falling further to Rs 61,300 per 10 gm on MCX.
Saurabh Gadgil, managing director of Pune-based PNG Jewellers said “Over the last few days, we have seen sales going up by almost 25 per cent. Price fall is the main reason for this sudden demand. Customers are buying at every dip in gold prices. The gold prices are volatile now.”
Added Suvankar Sen, managing director of Senco Gold & Diamonds “We are seeing that buyers are returning as the prices have fallen. The wedding season demand which remained muted for the last one month is showing some recovery.”
Analysts said that gold prices are likely to fall further and the next resistance level is at Rs 60,900 per 10 gm.
Jateen Trivedi, VP Research Analyst at LKP Securities said “The decline in gold prices can be attributed to several factors, notably the recent release of higher-than-expected Consumer Price Index (CPI) data in the US. With CPI figures reaching 3.1%, surpassing the 2.9% forecast and core CPI at 3.9% against 3.7% expectation, market sentiment weakened despite the data being in line with the previous month.”
This development has dashed hopes for imminent rate cuts by the Federal Reserve (Fed), with expectations for such cuts being pushed further into the future. As a result, the likelihood of sustained higher interest rates persists, exerting downward pressure on gold prices.
“The possibility of gold prices falling to Rs 60,000 per 10 gm cannot be ruled out, particularly given the continued positive momentum of the dollar index. This ongoing strength in the dollar has led to downward pressure on gold, pushing prices below Rs 61,500 per 10 gm in MCX and below $1995 in Comex. While geopolitical tensions in the Middle East have somewhat tempered gold's decline, any white flags resolution in the region could further exacerbate the downward trend in gold prices, potentially driving them below $1980 per troy ounce and Rs60,000 per 10 gm levels,” the LKP Securities executive said.