Gold prices experienced another significant drop on Friday, falling by Rs 900 to settle at Rs 72,650 per 10 grams in the national capital, driven by a subdued trend in global markets. This latest decline follows a steep fall of Rs 1,050 on Thursday, where the metal closed at Rs 73,550 per 10 grams, after a minor dip of Rs 50 on Wednesday. The continuous slide marks the third straight day of losses for gold.
Analysts at HDFC Securities attribute the drop to stronger-than-expected US macroeconomic data, which has bolstered expectations that the US Federal Reserve will maintain higher interest rates for a longer period.
Silver prices also saw a decrease, plunging by Rs 500 to Rs 92,100 per kilogram. The metal had settled at Rs 92,600 per kilogram in the previous session.
"Spot gold prices in the Delhi markets are trading at Rs 72,650 per 10 grams, down by Rs 900, influenced by bearish cues from the overseas markets," explained Saumil Gandhi, Senior Analyst of Commodities at HDFC Securities.
In the international markets, spot gold on Comex was trading at $2,340 per ounce, down $35 from the previous close. The S&P Global flash May composite purchasing managers index (PMI) reached its highest level since April 2022, surpassing all estimates. This data release led to an increase in US Treasury yields and the dollar index, which in turn pressured gold prices.
Silver also faced a downturn, trading lower at $30.45 per ounce.
"Gold has been weak this week, experiencing a significant sell-off of more than Rs 2,800 from weekly highs. This decline is primarily due to the reduced likelihood of the US Fed cutting rates early, as indicated by the recent meeting minutes. Despite this pullback, the overall rally in gold remains strong, and this week's decline should be viewed as a buying opportunity," commented Jateen Trivedi, VP Research Analyst, Commodity and Currency at LKP Securities.
Market experts also note that gold has been affected by diminishing safe-haven demand amid easing geopolitical tensions in the Middle East.