Gold, Silver Prices Fall: Precious Metals Gets Cheaper, 24-Carat Dips By Rs 1,090; What Fuelled Bears?

Prices of precious metals took a backflip on Tuesday tracking international prices as it is being believed that traders may have overdone aggressive pricing on expectations of rate cuts from the US Federal Reserve in the early 2024s. Another reason could be that traders were cashing in their gains as both gold and silver prices were at peak levels. Meanwhile, an upside was seen in the dollar index which further dampened the mood for haven assets.

On December 25th, a sharp slash was seen in 24-carat gold which erased its Rs 64,000 mark, while 22-carat and 18-carat gold in 10 grams slipped from Rs 58,000 and Rs 48,000 mark respectively. However, silver prices saw a much deeper downfall as much as Rs 2,000 for 1 kg.

In India, at retail stores, prices of 24-carat gold dropped sharply by Rs 1,090 per 10 grams to Rs 63,110 on Tuesday, as compared to a record level of Rs 64,200 that was witnessed on the previous day. Meanwhile, prices of 1 gram to 100 grams in 24-carat nosedived by Rs 109 to Rs 10,900.

Further, in the case of 22-carat, 10 grams of gold shed Rs 1,000 to Rs 57,850 as against its peak level of Rs 58,850 per 10 grams of the previous day. Here, 1-gram to 100-grams of yellow metal declined by Rs 100 to Rs 10,000.

Moreover, 18-carat gold in 10 grams dived by Rs 820 to Rs 47,330 from the previous day's all-time high level of Rs 48,150. Here, 1-gram to 100-grams gold has tumbled by Rs 82 to as massive by Rs 8,200.

Coming to silver prices at retail stores across India, 1 kg of this precious metal has plunged by Rs 2,000 to Rs 78,500 per 1 kg compared to the record high of Rs 80,500 per 1 kg posted on December 4th. Also, 1-gram to 100-grams of silver dipped by Rs 2 to Rs 200.

However, this was not the trend in bullion trading at MCX. At the time of writing, MCX gold prices with January expiry surged by Rs 132 to Rs 62,360 per 10 grams, and the February expiry advanced by Rs 133 to Rs 62,502. But MCX silver with March expiry shed Rs 88 to Rs 76,080 per 1 kg.

Jo Harmendjian, portfolio manager at Tiberius Group AG told Reuters that gold is the answer for many things at the moment - whether it's inflation carrying on, rate cuts or the uncertainty with very costly wars going on.

As hopes for the end of the rate hike cycle took rounds since last week, at the same time, expectations for sooner-than-expected rate cuts in early 2024s by the Fed also led traders to bulk buying of bullion. This led to a sharp drop in the dollar and treasury yield.

However, investors have taken a breather and will be focusing on a host of data in US job figures in the coming days for further clarity in the forthcoming Fed's monetary policy.

Currently, spot gold price has edged lower to near $2,031 an ounce. While US gold futures dived to $2,046.75 an ounce.

Rahul Kalantri, VP of Commodities, Mehta Equities said, "Gold and Silver prices surged early on Monday during the Asian session, with gold reaching a fresh record high of $2,150 and silver prices also reaching seven-month highs. However, this bullish momentum abruptly reversed as European and U.S. markets opened, leading to a substantial sell-off, possibly influenced by the rebound in bond rates."

He added, "The dollar index rebounded following hawkish comments from the Fed Chairman during his Friday speech. Precious metals also corrected in response to an uptick in U.S. bond yields and a sharp decline in crude oil prices. Despite this, strong demand from global central banks and downbeat U.S. economic data could provide support for both precious metals at lower levels."

Lastly, he said, "We anticipate that gold and silver prices will remain volatile in today's session. Gold has support at $2018-2005, with resistance at $2051-2064. Silver has support at $24.35-24.20, and resistance is at $24.62-24.80. In INR, gold has support at Rs62,120-61,850, with resistance at Rs62,780, 63,000. Silver has support at Rs75,450-74,780, and resistance at Rs76,970, 77,530."

Earlier this week, spot gold in London climbed to hit a new record high of $2,148.78 an ounce before correcting. US gold futures with December expiry also skyrocketed to hit a historic level of $ 2,151.20 an ounce before pulling.