Gold prices on Friday fell Rs 149 to Rs 38,875 per 10 gram in the national capital on the back of weak global cues, according to HDFC Securities. In the previous session, the precious metal closed at Rs 39,024 per 10 gram. According to reports, gold prices are now down about Rs 2,000 per 10 gram, from their record highs of about Rs 40,000 in early September.
On the Multi Commodity Exchange, gold contracts for December delivery traded lower by Rs 304, or 0.79 per cent, at Rs 37,962 per 10 gram in a business turnover of 2,928 lots. Similarly, the metal for delivery in February was down by Rs 326 to Rs 37,961 per 10 gram in 210 lots. Analysts attributed the fall in gold prices to trimming of positions by participants to book profits. Globally, gold traded 0.56 per cent down at USD 1,465.10 an ounce in New York.
Here are five reasons why gold prices have fallen:
1. On Friday, gold prices fell 0.5% at $1,464.17 per ounce in global markets. Gold prices have been choppy in recent days, reacting to comments from US and Chinese top officials about the progress of trade talks. HDFC Securities Senior Analyst (Commodities) Tapan Patel told PTI, "Prices in the global market fell after the White House Economic Advisor Larry Kudlow said the US was getting close to a trade agreement with China."
2. According to Live Mint, equity markets across the world have rallied in recent days, with Wall Street hitting new highs, denting the appeal of gold. "Increased global economic confidence might lead to decline in gold's demand as safe haven due to a likely trade deal between the US and China," Hareesh V- Head Commodity Research at Geojit Financial services told PTI.
3. People investing in gold have turned cautious and are waiting for the outcome of US-China trade talks. Gold holdings with SPDR ETF, the world's biggest gold-backed ETF, were unchanged at 896.773 tonnes, the lowest since September, Kotak Securities said in a note dated 15th November.
4. Looking at the dramatic situation on the US-China trade deal and strength in dollar index both the precious metals remain volatile. “Due to trade drama between US-china and strength in the dollar index, safe-haven buying eased in precious metals. After the Chinese commerce secretary comment last week as both the counties are agreed to roll back tariffs. Both the precious metals were crashed,” Manoj Kumar Jain, Director at IndiaNivesh Commodities told Moneycontrol. “In the domestic market weaker rupee support prices of both the precious metals. Gold is having strong support at 37500 and resistance is placed at 38050. Silver is having strong support at 43500 and resistance at 44400. Either side breakout of the range will give further direction to the prices,” he said.
5. Though gold prices fell recently, according to Live Mint, gold is up about 14% this year in global markets as the US-China trade spat has roiled financial markets and prompted fears of a global economic slowdown. Analysts told Live Mint that political and economical issues like Brexit, Hong Kong and trade talks may likely put a floor under gold prices and if something goes really wrong then prices will go higher.