MCX Gold Prices Drop by ₹544 per 10 Grams as Silver Sees Over 1% Decline.

Gold and silver prices experienced declines in Indian futures trade on August 18, reflecting weaker global price trends as investors adopted a cautious stance ahead of upcoming indications regarding the US Federal Reserve’s interest-rate trajectory. On the Multi Commodity Exchange (MCX), gold futures for October delivery fell by ₹544, or 0.35%, settling at ₹1.55 lakh per 10 grams, with a turnover of 9,895 lots. Meanwhile, silver futures for December delivery decreased by ₹2,535, or 1.04%, to ₹2.41 lakh per kg, observing 4,317 lots changing hands. This downturn comes amid a slide in global bullion prices, with gold futures in New York dropping 0.36% to $4,457.60 an ounce and silver declining 1.78% to $65.01 an ounce.

The drop in domestic prices is largely attributed to a decline in spot demand for gold and silver, as market participants reduced their holdings in response to rising yields on US Treasury bonds and inflation concerns stemming from escalating oil prices. Gaurav Garg, head of research at Lemonn, noted that the prospects of higher interest rates diminished the attractiveness of non-yielding precious metals. The Indian rupee’s value, around ₹95.68 against the US dollar, has also contributed to the decline, with expensive crude adding further pressure on the Indian currency.

Short-term outlook for traders suggests a cautious approach amid increasing expectations of a potential rate hold by the Federal Reserve, as evidenced by recent US jobs and inflation data. Prithviraj Kothari of RiddiSiddhi Bullions posits that while high prices might dampen some consumer enthusiasm, the upcoming festive season could bolster physical demand for gold, albeit with a tendency towards lightweight jewelry and smaller purchases. For silver, the market remains influenced by both investment sentiment and industrial demand expectations. As such, prices are expected to be driven primarily by the dynamics of global bullion prices, the rupee-dollar exchange rate, and domestic physical demand trends.

Source: Market Source

(Expert Note: This report was independently prepared by the Wealthova Commodities team.)