Gold Drops ₹1,500 To ₹1.6 Lakh Per 10 Grams

Gold prices in the national capital fell by ₹1,500 to ₹1,60,900 per 10 grams on Monday, marking the fourth consecutive session of decline. The decline was attributed to bearish global cues, which weighed on traders' sentiment.

The yellow metal of 99.9 per cent purity had closed at ₹1,62,400 per 10 grams on Friday. Traders stated that the decline in domestic gold prices also reflected continued profit-booking after the yellow metal's strong run in recent weeks.

Gaurav Garg, Head of Research at Lemonn Markets Desk, said that gold prices remained under pressure after Federal Reserve Chair Kevin Warsh's hawkish speech at the Jackson Hole Symposium increased expectations of an interest rate hike in September. Higher US Treasury yields and an elevated dollar further weighed on precious metals, extending their recent correction.

Globally, spot gold traded marginally lower at $4,448.56 per ounce, while silver gained nearly 1 per cent to $66.97 per ounce. The bullion market also took cues from rising oil prices after fresh US-Iran military strikes, with higher energy rates adding to inflation concerns and potentially strengthening the case for tighter monetary policy.

Praveen Singh, Head of Commodities at Mirae Asset ShareKhan, said that the fresh strikes pushed up oil prices, which has raised the possibility of an interest rate hike. The metal has already taken a hit globally on Friday, ending near $4,455 per ounce after Warsh cited elevated inflation and said underlying CPI and PCE trends were not encouraging.

Warsh also said that short-term interest rates could be effective in reining in inflation and that Fed officials have to act if inflation failed to fall soon. The hawkish remarks lifted expectations of a rate hike and triggered further profit-booking in precious metals.

However, silver remained steady at ₹2,45,500 per kilogram, according to local traders. The decline in gold prices may have an impact on India's economy, which has seen a surge in household wealth due to the strong run of the yellow metal in recent weeks.

In conclusion, the decline in gold prices is a significant development, and its impact on the economy will be closely watched. The hawkish stance of the US Fed and the rising oil prices have contributed to the decline in gold prices, and it remains to be seen how the market will react in the coming days.