New Delhi, 26 October (H.S.): Despite geopolitical tensions and mounting pressure across stock markets worldwide, gold prices have continued to decline in international markets, defying their traditional role as a safe-haven asset. Typically, weakness in equity markets or rising tensions in any part of the world tend to drive investors towards gold and silver. However, the current trend has been markedly different, with international gold prices falling more than 25 per cent from their all-time high.
Gold prices surged sharply in January this year before the precious metal embarked on a sustained decline. Market experts, however, believe that despite the recent sell-off, the longer-term upward trend in gold may remain intact. Continued gold purchases by central banks worldwide, coupled with geopolitical uncertainty, are expected to provide support to prices at lower levels.
In the international market, spot gold climbed to a record high of $5,600 per ounce on January 28 this year. Subsequently, several factors weighed on prices, including tensions in the Middle East, rising crude oil prices that fuelled global inflation concerns, and expectations that central banks in several countries might raise interest rates.
These developments also challenged the conventional perception of gold as a safe investment, contributing to a decline of more than 25 per cent from its peak. As of 6 pm Indian Standard Time on Monday, gold was trading at $4,018.97 per ounce in the international market.
The domestic gold market has largely mirrored global trends. On January 29 this year, gold futures on the Multi Commodity Exchange (MCX) touched an all-time high of Rs. 1,76,306 per 10 grams. The sharp correction from that peak prompted investors to book profits, putting further pressure on prices.
Gold prices in the domestic market, however, registered a modest recovery on Monday. December-delivery gold futures on the MCX were trading slightly higher at Rs. 1,42,024 per 10 grams. In the physical bullion market, gold prices across different cities ranged from Rs. 1,42,500 to Rs. 1,45,436 per 10 grams.
According to commodity market expert Mayank Mohan, a stronger US dollar and a sustained rise in bond yields have increased the opportunity cost of holding non-yielding assets such as gold, exerting pressure on prices.
Additionally, a decline of more than 2 per cent in crude oil prices on Monday eased some inflationary concerns. Investors are now closely watching the US Federal Reserve’s monetary policy decision expected later this week, which could play a significant role in determining gold’s near-term direction.
Market experts have advised investors to avoid making large, one-time purchases amid heightened volatility. Instead, they recommend considering a staggered investment approach, buying smaller quantities during price declines rather than committing a substantial amount at once.
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Hindusthan Samachar / Jun Sarkar
