Gold Drops By Rs 3,400 After US-China Trade-Deal News Curbs Demand

Gold prices in Delhi plummeted by Rs 3,400 to Rs 96,550 per 10 grams on Monday. This steep decline was triggered by traders reducing safe-haven buying following the US announcement of a 90-day pause on tariff increases for Chinese imports.

The All India Sarafa Association reported that the price of 99.5% purity gold fell by Rs 3,400 to Rs 96,100 per 10 grams on Monday. This marks the largest single-day drop in gold prices in 10 months, since a Rs 3,350 slip on July 23, 2024.

On Saturday, the closing prices for 99.9% and 99.5% purity gold were Rs 99,950 and Rs 99,500 per 10 grams, respectively.

"Gold prices fell sharply amid signs of progress in trade talks between the US and China, along with some relief in geopolitical tensions, including India-Pakistan," said Rahul Kalantri, vice president of commodities at Mehta Equities.

Silver prices also experienced a downturn, falling by Rs 200 to Rs 99,700 per kg compared to Saturday's close of Rs 99,900 per kg.

Following trade discussions in Geneva over the weekend, the US agreed to decrease its tariff rate on Chinese goods from 145% to 30% for a 90-day period. In return, China agreed to lower its tariffs on US goods to 10% for the same duration.

"Geopolitical tensions cooled with signs of a potential truce between Russia and Ukraine, and an understanding between India and Pakistan on military actions," according to Jateen Trivedi, research analyst of commodity and currency at LKP Securities. "These developments led to heavy profit booking in gold, which had previously rallied on global uncertainty."

Trivedi further noted that a "strong rally in stock markets also hit gold's appeal as a safe-haven bet".

In futures trading on the Multi Commodity Exchange, the most actively traded gold contract saw a significant drop of Rs 3,932, or 4.07%, to trade at Rs 92,586 per 10 grams. In the global spot market, gold prices tanked by over 3% to trade at $3,218.70 per ounce.

(With inputs from PTI)