Gold prices in India witnessed a significant correction on Thursday, snapping a four-day-long record-breaking rally. The precious metal saw a sharp decline, providing some relief to buyers after a relentless upward climb.
A Sharp Reversal in Fortunes
After hitting consecutive all-time highs, the price of gold (24-carat) fell by ₹1,700 to settle at ₹1,35,000 per 10 grams in the national capital. This marked a decisive end to the bullion's record-setting streak. Similarly, silver prices also retreated, dropping by ₹1,100 to ₹80,000 per kilogram.
The decline was mirrored in the futures market. On the Multi Commodity Exchange (MCX), the most active gold contract for June delivery dropped by 0.87% or ₹730 to close at ₹83,190 per 10 grams. This contract had previously scaled a lifetime peak of ₹84,068. Silver futures for July delivery followed suit, declining by 1.21% or ₹1,100 to finish at ₹89,580 per kilogram.
Global Cues and Domestic Factors at Play
The primary driver for this pullback was a drop in international gold prices. In global markets, spot gold was trading lower at $2,383.29 per ounce. Analysts pointed to a combination of factors influencing the international trend:
- Profit-booking by investors after the metal's rapid ascent to record levels.
- A strengthening US dollar, which makes gold more expensive for holders of other currencies.
- Evolving expectations regarding the timing of interest rate cuts by the US Federal Reserve.
Domestically, the price drop was amplified by a slight recovery in the Indian rupee against the US dollar. A stronger rupee reduces the cost of importing gold into the country, thereby exerting downward pressure on local prices.
Market Outlook and Trader Sentiment
The sudden correction has shifted market sentiment. Traders and analysts are now closely watching key economic data from the United States, particularly the non-farm payrolls report scheduled for release on Friday. This data is a crucial indicator of the US labor market's health and will significantly influence the Federal Reserve's monetary policy decisions.
"The sharp rally in prices prompted some investors to lock in profits," noted a market analyst. The focus has now turned to whether this decline is a temporary consolidation or the beginning of a more sustained downtrend. Market participants are adopting a cautious stance, awaiting clearer signals from macroeconomic data and central bank commentary.
For Indian consumers and investors, this price drop offers a potential buying opportunity after weeks of watching prices soar to unaffordable levels. However, the inherent volatility in the bullion market suggests that prices could swing in either direction based on the upcoming global economic cues.
