Gold rates within India didn’t respond well to the weak demand in the global market, and fell sharply. Monday, 17th December saw a poor day of trading for gold in the Indian market, as the prized asset fell lower today. Gold prices in the local market fell by some Rs 190 today to reach the exact value of Rs 32,000 per 10 gram of gold.
Gold prices started strong this December, but haven’t been able to keep the momentum intact. This is the second consecutive day of losses for gold in the local market. Gold prices had also fallen by Rs 160 a couple of days ago on Saturday. While gold has been falling sharply, silver maintained a steady position today at Rs 38,400 in the local market. Silver prices didn’t fluctuate throughout the day and maintained the price at which they started at.
Traders believe that gold prices are impacted because of the muted end of the season demand within the local market of India. November and December are known as the wedding season in India, and with the period coming to an end, the demand is muted within the market.
This muted demand and a weak trend in the overseas market has been the reason behind this sharp fall in gold prices. Gold of both 99.9 percent and 99.5 percent fell in value by Rs 190 to reach cumulative rates of Rs 32,000 and Rs 31,850 for 10 grams, respectively. Prices for sovereign gold remained steady at their position, as they remained put at Rs 25,000 for a piece of 8 gram.
Silver ready also kept flat at Rs 38,400 throughout the day, as it witnessed the fall in gold prices. Silvery weekly-based delivery could, however, not mimic the steadiness of silver ready, as the metal fell by over Rs 124 to reach rates of Rs 37,930 in the local market. Silver coins have maintained their steady prices to remain at Rs 74,000 for the buying and Rs 75,000 for the selling of 100 pieces of pure silver.
The prices of gold remained weak in the global market on Monday as the United States dollar held firm below the peak for a 19 month high. Investors across the United States are awaiting the results from the dialogue taking place at the US Federal Reserve during this week. The meeting will decide the interest rates for the dollar, and how that will change in the future.
Analysts predict that gold prices will remain weak during the week because of the announcement by the Fed.
“Ahead of the FOMC (Federal Open Market Committee) meeting, we are going to see some downward movement… But the fact remains that the underlying strength in gold is likely to continue,” says Kunal Shah, head of research, Nirmal Bang Commodities.
Higher rates of interest in the United States will turn up as a negative sign for gold, as this will increase the opportunity cost for investors holding on to gold, ultimately leading to people resorting to other safer options.