Gold falls Rs 1,400 to Rs 1.53 lakh as stronger rupee, weak global cues weigh on prices

Gold prices declined Rs 1,400 to Rs 1,53,000 per 10 grams in the national capital on Monday as a stronger rupee and weakness in international markets weighed on domestic bullion rates. Silver also fell Rs 2,000 to Rs 2,26,500 per kilogram amid subdued global trends, according to the All India Sarafa Association.

Gold of 99.9% purity had closed at Rs 1,54,400 per 10 grams on Friday, while silver had settled at Rs 2,28,500 per kilogram. Both rates are inclusive of applicable taxes.

Market analysts attributed the decline to weakness in international precious metal prices and a sharp appreciation of the Indian currency against the US dollar, which made imported bullion relatively cheaper in rupee terms.

𝗦𝘁𝗿𝗼𝗻𝗴𝗲𝗿 𝗿𝘂𝗽𝗲𝗲 𝗽𝗿𝗲𝘀𝘀𝘂𝗿𝗲𝘀 𝗯𝘂𝗹𝗹𝗶𝗼𝗻

The rupee appreciated 96 paise to close at 95.75 against the US dollar, recording its steepest single-day gain in more than six months. The recovery followed a series of measures announced by the Reserve Bank of India over the weekend to support the domestic currency.

Saumil Gandhi, Senior Analyst, Commodities, at HDFC Securities, said weakness in overseas markets and the rupee's recovery had combined to push domestic bullion prices lower.

"Gold prices eased in the domestic market on Monday due to weak global cues, while a stronger Indian rupee added further pressure on the precious metals prices," Gandhi said.

He added that physical demand remained mixed, with domestic buying subdued amid elevated prices. However, demand in China was expected to improve following the holiday-shortened trading period.

𝗚𝗹𝗼𝗯𝗮𝗹 𝗴𝗼𝗹𝗱 𝗽𝗿𝗶𝗰𝗲𝘀 𝗱𝗲𝗰𝗹𝗶𝗻𝗲

In international markets, spot gold fell USD 17.36, or 0.41%, to USD 4,176.88 per ounce, while silver traded marginally lower at USD 60.66 per ounce.

Gaurav Garg, Head of Research at brokerage platform Lemonn, said gold remained under pressure despite a decline in international crude oil prices. He attributed the weakness partly to the strength of the US dollar, which continued to limit gains in precious metals.

"Gold traded lower around USD 4,179 an ounce in global markets despite softer oil prices. The US dollar index remained near an 18-month high, limiting upside potential in precious metals," Garg said.

A stronger dollar generally makes dollar-denominated commodities more expensive for buyers using other currencies, potentially affecting demand for gold and silver.

𝗢𝗶𝗹 𝗽𝗿𝗶𝗰𝗲𝘀 𝗮𝗱𝗱 𝘂𝗻𝗰𝗲𝗿𝘁𝗮𝗶𝗻𝘁𝘆

Crude oil prices eased as expectations of increased Russian energy supplies helped reduce immediate concerns over global availability. However, renewed geopolitical tensions in West Asia and risks to regional shipping routes continued to create uncertainty in energy markets.

Garg said these developments were contributing to volatility in crude prices, with potential implications for inflation expectations and investor sentiment.

Precious metal markets have remained sensitive to geopolitical developments, movements in the dollar and changes in global interest-rate expectations. While uncertainty can support demand for gold as a safe-haven asset, higher bond yields and dollar strength can limit its attractiveness.

𝗜𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀 𝗮𝘄𝗮𝗶𝘁 𝗳𝗿𝗲𝘀𝗵 𝗰𝘂𝗲𝘀

Vikram Subburaj, CEO of investment platform Giottus.com, said gold appeared to have a stronger near-term outlook than silver, whose relatively muted performance called for greater caution.

He said investors would closely monitor movements in the US dollar, American bond yields, the rupee and forthcoming inflation data before concluding that the latest price movement represented a sustained trend.

The direction of domestic bullion prices is likely to remain influenced by international market conditions and currency fluctuations. Although Monday's decline provided some relief to buyers, analysts indicated that further clarity on global monetary conditions and inflation would be necessary to assess whether the correction would continue.