The prices of gold and silver have seen a significant drop just before the start of the festive season. This drop can be attributed to the strength of the US dollar, which reached an 11-month high on the American Dollar Index.
This rise in the dollar’s value has put pressure on both domestic and international markets, causing gold and silver prices to hit their lowest levels in the past 7 months. In the global market, the price of gold has experienced a substantial decline, reaching nearly $1,815 per ounce, which has had a direct impact on the Indian market, where the price of 995 gold per ten grams now stands at INR 56,448. Silver has also slid by more than 4%, reaching levels around 66,000 INR.
Experts suggest that gold and silver prices may continue to decline further. According to Surinder Mehta, the National Secretary of IBJA (Indian Bullion and Jewellers Association), gold prices in the coming days could reach around $1,784 per ounce, equivalent to approximately 54,600 INR per ten grams in the domestic market. The funding arrangements in the United States have led to a selloff, and once this selling pressure subsides, gold prices are expected to rise again, making it an opportune time for buyers.
Additionally, Sanyam Mehta, Chairman of GJC (Gem & Jewellery Export Promotion Council), anticipates that gold prices could reach $1,795 per ounce. Despite the decreased prices of gold, they haven’t yet translated into increased retail demand due to the ongoing COVID-19 pandemic. To stimulate demand, GJC has launched a Diwali edition, offering gold at lower prices.
The drop in gold and silver prices is primarily attributed to the widespread strength of the US dollar index, reaching an 11-month high. This surge in the US dollar can be attributed to long-standing concerns about elevated US interest rates and higher Treasury yields. The Indian Rupee, in comparison to the dollar, weakened and closed at around 83.2050. The Dollar Index itself has risen to 107.21, its highest level since November 2022.
In conclusion, the recent dip in gold and silver prices is a result of the robust US dollar and higher Treasury yields, causing the Indian Rupee to weaken. However, experts suggest that these prices may further decrease if US Treasury yields rise above 4.75%, potentially reaching record lows in the near future.