Following the falling trend in the international market, domestic gold prices on Thursday declined nearly Rs 1,800 to Rs 95,050 per 10 grams in the national capital.
According to the All India Sarafa Association, the yellow metal of 99.5% purity plunged Rs1,800 to Rs 94,600 per 10 grams (inclusive of all taxes).Gold of 99.9% and 99.5% purity had closed at Rs 96,850 and Rs 96,400 per 10 grams, respectively, on Wednesday.
As uncertainty fades, investors are shifting towards riskier assets. Silver prices also on a losing streak for the fourth straight day, declining Rs 900 to Rs 97,000 per kg. The white metal had settled at Rs 98,000 per kg in the previous market session.
“On Thursday, bullion extended its losses due to several bearish factors, including the hawkish stance of multiple Fed members, the overall recovery of the US dollar, and a reduction in trade tensions. All these factors have contributed to a decline in bullion prices over the last two sessions, said Anuj Gupta, head of commodities & currencies at HDFC Securities.
Higher yields and interest rates also have a negative impact on non-interest-bearing gold, Gupta said. Yields on US treasuries have increased because investors believe the Federal Reserve will delay lowering borrowing costs longer than previously expected. This expectation is fuelled by a more optimistic economic outlook following the US-China trade truce.
The decline in bullion prices was reinforced by the stabilisation of geopolitical risks, notably the easing of India-Pakistan tensions and growing optimism surrounding potential US sanctions relief on Syria, according to Axis Securities.
Globally, spot gold plunged $16.81, or 0.53% to $3,160.71 per ounce. Pranav Mer, vice-President, JM Financial Services, said investors now will be focussing on Russia-Ukraine peace talks, US macroeconomic data such as producer inflation, jobless claims and US Federal Reserve Chair Jerome Powell's speech later in the day, which could provide more impetus on the future trajectory for bullion prices, he added.