Gold and Silver Prices Snap 9-Week Rally Amid Profits and Easing Tensions

Strategic Insights -

Gold and silver prices lost their festive sparkle this week, snapping a nine-week rally as investors booked profits amid a strong dollar, easing geopolitical tensions, and falling global prices. Both metals had surged since late August, with gold hitting a record Rs 1,32,294 per 10 grams and silver peaking at Rs 1,70,415 per kg on October 17. The steep correction was triggered by profit-booking and a post-Diwali slowdown in domestic demand, as well as global gold ETFs recording net outflows in mid-October.

Key Takeaways:

  • Gold prices on the Multi Commodity Exchange (MCX) dropped Rs 3,557, or 2.80 per cent, to close at Rs 1,23,451 per 10 grams on Friday.
  • Silver prices plummeted Rs 9,134, or 5.83 per cent, to settle at Rs 1,47,470 per kg on the MCX.
  • The steep gold correction was triggered by profit-booking, post-Diwali slowdown in domestic demand, and global gold ETFs recording net outflows in mid-October.
  • N S Ramaswamy, head of commodities & CRM at Ventura, stated that while physical jewellery purchases have slowed after Diwali, digital safe-haven demand remains robust.
  • Pankaj Singh, investment manager at SmartWealth.ai, described the decline as a natural market adjustment following speculative demand and supply constraints.
  • The structural case for precious metals remains firm, driven by central bank purchases and inflation hedging demand.

Statistics:

  • Gold prices lost Rs 8,843 (6.68%) since their peak on October 17.
  • Silver prices fell by Rs 22,945 (13.46%) since their peak on October 17, according to PTI.
  • Gold prices on Comex touched a lifetime high of $4,398 per ounce on Monday.
  • Silver futures on Comex retreated from a record $53.76 per ounce to $47.12 per ounce by October 21.

Sources:

  • PTI
  • MP Financial Advisory Services LLP
  • Ventura
  • SmartWealth.ai