Gold Price Crash! Tumbles by ₹1,000 While Silver Skyrockets. Here’s Why!

Gold price fall: Gold prices took a significant hit in the national capital on Thursday, plummeting by a steep ₹1,000 per 10 grams. This sharp decline has brought the price of the precious yellow metal down to ₹1,23,400 per 10 grams, driven by a stronger US dollar following cautious signals from the US Federal Reserve and positive developments in US-China trade relations.

According to the All India Sarafa Association, the price drop affected gold of varying purities. This downturn in the domestic market reflects a complex interplay of global economic cues that have diminished gold’s allure as a safe-haven asset for investors.

Why Did Gold Prices Tumble?

Several key international factors contributed to the sharp fall in domestic gold prices.

• Federal Reserve’s Cautious Stance: The primary trigger was the commentary from Federal Reserve Chair Jerome Powell. While the US central bank did cut interest rates by a quarter point as anticipated, it signalled that further rate cuts might not be imminent. Saumil Gandhi, Senior Analyst at HDFC Securities, noted, “The US central bank…indicated that market expectations for another rate cut at the upcoming December meeting may be premature.” This “hawkish” tone strengthened the US dollar and increased US bond yields, making non-yielding assets like gold less attractive.
• US-China Trade Optimism: Progress in trade negotiations between Washington and Beijing further dampened the demand for gold. Positive remarks from US President Donald Trump about a potential trade deal with President Xi Jinping eased global economic anxieties, reducing the need for investors to flock to the safety of gold.

Silver Shines Bright, Bucks the Trend

In a surprising contrast to the gloom in the gold market, silver prices experienced a massive surge. The price of the white metal jumped by an impressive ₹3,300, reaching ₹1,55,000 per kilogram. This represents a significant rally from its previous close of ₹1,51,700 per kg.

Here is a summary of the price changes in the Delhi bullion market:

Global Cues and Market Outlook

Interestingly, the trend in the international market was slightly different. Spot gold actually rose, snapping a four-day losing streak, gaining 1.36 per cent to USD 3,983.87 per ounce. Jateen Trivedi of LKP Securities attributed this to renewed geopolitical risks, stating, “The sentiment is driven after US President Donald Trump hinted at allowing nuclear weapons testing…which kept the risk meter elevated.”

Despite this, the strengthening dollar, with the dollar index rising 0.12 per cent, ultimately weighed on the domestic price of the yellow metal. Looking ahead, market experts suggest that traders will be closely watching upcoming speeches from Federal Reserve officials for more clarity on the interest rate outlook, which will likely determine the near-term direction for bullion prices.