Retail gold prices in the national capital witnessed a significant decline of Rs 1,000, settling at Rs 98,400 per 10 grams on Monday, according to the All India Sarafa Association.
This drop occurred amid increasing optimism surrounding a potential resolution to the US-China trade tensions.
The price of gold with 99.5% purity also depreciated by Rs 1,000 to Rs 97,900 per 10 grams. Chintan Mehta, chief executive officer at Abans Financial Services, said, "Gold prices continued to decline as easing US-China trade tensions boosted investors' risk appetite, reducing demand for safe-haven assets like bullion, while a stronger dollar added downward pressure on gold."
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Global Developments
Recent developments included China's announcement of exemptions for some US imports from tariffs, although formal trade talks were denied. US Federal Reserve officials indicated no immediate need for monetary policy adjustments, preferring to observe the economic impact of existing tariffs.
This hawkish stance suggests potential delays in interest rate cuts, further diminishing gold's appeal as a non-yielding asset in a high-interest rate environment.
Despite the downward pressure, Mehta noted that "rising geopolitical tensions could limit gold's downside. As war risks escalate and new conflicts emerge, investors are likely to seek refuge in gold."
He further added, "With tensions brewing among major powers, and regional strains like the growing friction between India and Pakistan, demand for gold as a safe-haven asset is expected to rise, making it a preferred hedge against market volatility and uncertainty."
Jateen Trivedi, VP research analyst of commodity and currency at LKP Securities, commented, "Gold traded weak amid the US opening tariff talks with multiple nations and growing expectations of a possible China-US trade agreement according to US President Donald Trump. Additionally, optimism around a potential Russia-Ukraine peace deal further weighed on safe-haven demand for gold."
Looking ahead, Saumil Gandhi, senior analyst of commodities at HDFC Securities, stated that "this week traders expect the spotlight will be mostly on tariff-related developments. On the macroeconomic front, US data release such as manufacturing PMI data for April, GDP data, and, most importantly, US non-farm payrolls and unemployment rates will impact the bullion market."
(With PTI inputs)
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