Gold prices saw a huge decline on Wednesday, which reached its lowest level in the last one week. The strengthening of the US dollar and the increase in the treasury yield put pressure on gold. Along with this, the new threats of tariff from former US President Donald Trump increased uncertainty in global markets. The strength of the rupee in India also pulled the gold prices down further. The market is now waiting for the economic figures coming from America, which can decide the direction of gold prices.
Why the decline in gold?
Spot gold in the international market at 06:24 GMT was trading at $ 3,286.96 an ounce in the international market, which is the lowest level since June 30. American gold futures were also at $ 3,295 below 0.7%. The gold contract of August 5 on India’s Multi Commodity Exchange (MCX) fell 0.30% to ₹ 96,178 per 10 grams.
The major reason for this decline was the rise in US dollars and the yield of 10 -year -old American Treasury notes increased. The dollar reached a high level of two weeks, while the Treasury Yield was close to three weeks of peak. In addition, Donald Trump’s tariff rhetoric increased the market nervousness. Trump talked about imposing 50% tariff on imported copper, as well as threatening tariffs on areas such as semiconductor and pharmaceuticals. On Tuesday, he warned BRICS countries to repeat 10% tariffs on imports and warn 14 countries including Japan, South Korea to increase tariffs from 1 August.
Usually, gold is considered a safe investment in such geopolitical and business upheaval, but this time the market trend went towards dollars and American treasury, which faded the glow of gold.
The strength of the rupee increased pressure
Gold prices in India also affected the strength of rupee. According to Jatin Trivedi, VP Research Analyst of LKP Securities, a strength of 0.23% of the rupee put additional pressure on gold prices in the local market. Trivedi said that gold is facing registration at $ 3,330-3,350 in the international market, while support at $ 3,290. This registration is at ₹ 97,500 and support ₹ 95,500 for Indian rupees.
He said, on the basis of US business decisions and tariffs related to tariffs, gold prices can break the range-bound trend. The market is now waiting for the US non-form payroll and unemployment figures, which will be released late tonight. These figures can affect the monetary policy of the US Federal Reserve and will decide the direction of gold prices. Trivedi estimates that gold prices will be between ₹ 95,500 to ₹ 98,500 in the near future.
Bullish attitude of experts
Despite the recent decline, experts are positive about the medium -term trends of gold. PL Capital CEO and Retail Broking and Distribution Director Sandeep Raichura said that central banks from all over the world are buying more than 1,000 tonnes of gold every year and this trend is not going to change soon. He also said that inflation in the US is still above the comfort zone of the Federal Reserve, which is positive for gold prices.
Raichura said, recently there has been a slight decline in gold prices after the reports of ceasefire and strong US economic figures. But its basic factors are still strong. In the medium period we are looking at gold within a radius of $ 3,150-3,500 and it can cross $ 3,700 in the long period.
What is a chance for investors?
Experts believe that existing decline may be a good opportunity for investors to shop. Central banks’ purchase, continuous inflation and geopolitical uncertainties are supporting the demand for gold. However, investors will have to monitor the US economic figures and global trade stress.
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