Gold Loses Shine In Delhi, Will Dollar Pressure Push Prices Lower?

New Delhi: Gold prices declined in the national capital on Tuesday as weak retail buying and a firm US dollar kept pressure on the precious metal, even as international bullion prices showed marginal gains.

Gold of 99.9 percent purity fell by Rs 200 to Rs 1,49,600 per 10 grams, according to local traders. The yellow metal had closed at Rs 1,49,800 per 10 grams in the previous session.

Silver Holds Firm

While gold moved lower, silver remained unchanged for the second consecutive session at Rs 2.27 lakh per kilogram, inclusive of all taxes.

Traders attributed the fall in domestic gold prices largely to subdued demand from consumers and jewellers.

Saumil Gandhi, Senior Analyst - Commodities at HDFC Securities, said gold prices edged lower in the domestic market due to weak global cues and subdued retail demand during the Pitru Paksha period.

Consumers traditionally avoid buying auspicious items such as gold, jewellery, property and other luxury products during Pitru Paksha, which can temporarily affect physical demand.

Global Gold Edges Higher

In overseas markets, spot gold was trading marginally higher at USD 4,149.44 an ounce, while silver remained almost flat at USD 61.01 an ounce.

Praveen Singh, Head of Commodities at Mirae Asset Sharekhan, said spot gold was trading with gains at around USD 4,151 an ounce as the US dollar and crude oil prices eased.

The movement in the dollar remains particularly important for bullion. A stronger US currency generally makes dollar-denominated gold more expensive for buyers using other currencies, potentially weighing on demand.

What Could Drive Gold Next?

According to Singh, gold prices are likely to continue taking cues from movements in crude oil and the US dollar in the near term.

He expects the precious metal to remain largely range-bound with a slight bearish bias as appetite for riskier assets remains healthy.

For domestic buyers, movements in international gold prices, the rupee-dollar exchange rate and a revival in physical demand will remain key factors determining the next direction for bullion prices.