Gold prices slid for the second straight day, declining by Rs 2,100 to Rs 1.53 lakh per 10 grams in the national capital on Thursday amid rising tensions in West Asia, which kept investors’ sentiment subdued in the bullion market.
According to marketmen, the yellow metal of 99.9 per cent purity depreciated by Rs 2,100 to Rs 1,53,900 per 10 grams (inclusive of all taxes) from Wednesday’s closing level of Rs 1,56,000 per 10 grams.
Analysts said the prolonged tensions in West Asia have raised concerns over elevated energy prices and inflation, limiting the appeal of gold.
“The current downtrend is caused by a combination of macro and market factors, including ongoing worries about inflation, a change in expectations from possible interest rate cuts and the ongoing strength of the US dollar and Treasury yields,” Saumil Gandhi, Senior Analyst of Commodities at HDFC Securities, said.
Sustained outflows from gold-backed exchange-traded funds (ETFs) further dampen investor sentiment toward precious metals, indicating a decline in demand for precious metals, he added.
Meanwhile, bullion sentiment in the international markets remained under pressure. Spot gold was trading flat at USD 4,072.21 per ounce while silver slipped marginally to USD 63.18 per ounce, after the European Central Bank raised its key interest rates by 25 basis points on Thursday, reinforcing expectations of a tighter global monetary policy.
Praveen Singh, Head of Commodities at Mirae Asset ShareKhan, said investors are also pricing in further policy tightening by the US Federal Reserve next week, with the higher interest rate outlook likely to weigh on precious metal prices.