Gold and silver prices tumbled this week to register their biggest weekly fall in many months. On MCX, gold futures dipped ₹238 on Friday to settle at ₹49,666 per 10 gram. Tracking gold, silver dipped 1% to ₹59018 per kg. On a weekly basis, gold prices fell ₹2,000 per 10 gram in India while silver tumbled ₹9,000 per kg.
Slippage below ₹49,250 could squeeze down prices lower to 48900-48800 region firstly or even lower, says domestic brokerage Geojit Financial Services.
In global markets, gold and silver prices posted their biggest weekly losses since March. Gold fell 4.6% this week, while silver slumped 15%. Analysts attributed the fall to a resurgent US dollar as concern over the outlook for global economic growth bolstered the appeal of the world’s most liquid currency as a safe-haven.
Gold, which is also seen as a hedge against inflation, was also pressured by abating concerns about inflation as dimming view of the recovery undercuts the outlook for a rise in consumer prices.
The risk-off sentiment has led to a rally in US Dollar to a two month high and concomitantly falls in gold prices, says Hemant Kanawala, Head – Equity, Kotak Mahindra Life Insurance.
Some analysts however say that gold’s slump may be temporary with increased uncertainty over the US presidential election. Gold may also find support at lower levels as geopolitical tensions remain while economic outlook also remains dim, they said.
The prospects of more stimulus could also support gold. U.S. House Democrats have started drafting a stimulus proposal of roughly $2.4 trillion that they can take into possible negotiations with the White House and Senate Republicans. The bill could get passed by the House next week. (With Agency Inputs)
