Gold down about 20% since start of year; 24-carat at Rs 1,48,138 per 10 grams
Gold prices have fallen about 20 per cent since January after heavy profit booking following the US-Iran war, with Fed rate expectations driving the market.
Gold and silver prices touched record highs this year. After the US-Iran war, however, the market saw heavy profit booking, contrary to expectations. Gold has fallen about 20 per cent since the start of the year.
In the international market on Friday, spot gold closed about 0.9 per cent lower at $4,140 an ounce. For the week as a whole, it lost 3.4 per cent.
Gold prices usually rise as a safe-haven investment during geopolitical tension or war. This time the picture was entirely different. The market is gripped by a deep fear that the military clash between Iran and the US will send crude oil and essential commodity prices soaring and make inflation run out of control worldwide. To rein in this rising inflation, the US central bank, the Federal Reserve, could raise interest rates. This apprehension has kept heavy pressure on gold for the past few months.
Initially, a strong possibility was being expressed that the Federal Reserve would raise interest rates by the end of this month. Then some softer inflation data came in from the US and that expectation changed. According to market experts, the Federal Reserve may keep the interest rate at its current level at its meeting on October 28. The probability of a hike, earlier put at around 70 per cent, has now dropped to only about 22 per cent. If rates are not raised, the decision could give gold prices a big boost.
In India, bullion markets and the MCX were closed on October 2 for Gandhi Jayanti. The fall in the international market on Friday therefore did not show up immediately in Indian markets. When markets reopen on Monday, October 5, after the long weekend, the weakness abroad is expected to have an initial effect here too. Gold's direction ahead will depend entirely on the Federal Reserve's stance and upcoming decisions.
According to the India Bullion and Jewellers Association (IBJA), 24-carat gold was priced at Rs 1,48,138 per 10 grams on Sunday, October 4. By IBJA's rates, 22-carat gold is Rs 1,47,545, 20-carat Rs 1,35,694, 18-carat Rs 1,11,104 and 14-carat Rs 86,661 per 10 grams.
Across cities including Mumbai, Thane, Ratnagiri, Pune, Nagpur, Kolhapur, Chhatrapati Sambhajinagar, Jalgaon, Sangli and Baramati, the gold rate is given as Rs 1,48,138 per 10 grams. According to IBJA, silver is Rs 2,20,829 per kilogram on Sunday, October 4.
