Last Updated:November 15, 2024, 18:05 IST

The latest gold and silver prices are at their two-month lows as the prices below this were last recorded on September 20, 2024, when the 24-carat yellow metal had stood at Rs 75,526.

Experts say the gold prices in India are falling due to global factors, especially US economic data releases that raise expectations of fewer rate cuts by the Federal Reserve.

After hitting an all-time high of Rs 81,000 at the end of last month, gold prices in India have fallen significantly to a two-month low of Rs 75,790 per 10 grams. Silver is also now down to below Rs 90,000 as against its peak of Rs 1,00,000 per kg at October-end. Experts say the gold prices in India are falling due to global factors, especially US economic data releases that raise expectations of fewer rate cuts by the Federal Reserve.

The latest rates of gold and silver are at their two-month lows as the prices below this were last recorded on September 20, 2024, when the 24-carat yellow metal had stood at Rs 75,526.

Why Are Gold Prices Falling?

Recent inflation data in the US showed a more-than-expected increase in prices in October. The US CPI data, which came in higher at 2.6 per cent compared to the expected 2.4 per cent, fuelled the dollar’s strength, hurting gold prices globally. Also, the latest core Producer Price Index (PPI) in October increased 3.1 per cent, up from 2.8 per cent in the previous month and an expectation of 3 per cent.

Higher inflation makes it difficult for central banks to cut interest rates. Also, higher interest rates increase the opportunity cost of holding bullion, thus weakening its demand and prices.

Jateen Trivedi, vice-president (research analyst) for commodity and currency, LKP Securities, said, “Gold’s weakness persisted with price falling below $2,550 and near Rs 73,500 in MCX as the dollar climbed above 106.50 and edged closer to 107. The latest US CPI data fuelled the dollar’s strength. While the Fed has been continuing with rate cuts as inflation approached its 2 per cent target, the higher-than-expected CPI reading raises concerns that further cuts may be paused. This development added pressure on gold prices, which reacted negatively to the stronger dollar and the potential shift in Fed policy.”

A higher dollar typically makes gold cheaper in terms of dollar purchasing power. However, weakening local currencies may make it expensive for respective countries, thus reducing further demand and making it further cheaper.

Pranav Mer, vice-president, EBG (commodity & currency research) at JM Financial Services Ltd, said gold continues to trade lower, weighed by a higher dollar and elevated treasury yield after US CPI data showed inflation remains sticky above the Fed’s 2 per cent target.

In the international market, gold prices have fallen to $2,551.8 per ounce and silver has declined to $30,21 an ounce after weeks of weakness. The global gold prices have declined more than $220 from the record peak hit last month.

Gold Prices Fall: What’s the Near-Term Outlook?

Analysts expect that the gold prices are likely to fall to Rs 72,500 in the near term.

JM Financial’s Pranav Mer said, “On the Technical chart, momentum looks corrective with resistance at 74500/ 75350, while on the downside support holds at 73400/ 72580″.

Now, in focus remains the US retail sales data that is due later today, he added.

“Gold’s weakness reflects expectations of a more restrictive US monetary policy in 2025 under Trump,” said Fawad Razaqzada, market analyst at Forex.com.

According to the CME Fedwatch tool, markets see a 59 per cent chance of a 25-basis-point rate cut in December, down from 83 per cent a day ago.

On Thursday, US Fed Chair Jerome Powell said steady economic growth, a strong job market, and persistent inflation justify caution in cutting rates quickly.