The price of gold fell for the second consecutive day on Monday. On Multi Commodity Exchange or MCX, gold price fell 0.4 per cent to ₹52,207 per 10 gram.
The price of silver, meanwhile, edged higher reaching ₹67,403 per kg.
Gold price fell 4.5 per cent last week, its biggest weekly decline since March. In the last 10 days, gold is down about ₹4,000 per 10 gram.
Situation across the world
Gold price further tumbled in the global markets after capping worst last week in five months. Spot gold was down 0.2 per cent at $1,941.90 an ounce.
After hitting a record peak of $2,072.50 on August 7 and rising over the previous nine weeks, bullion declined 4.5 per cent this week.
“The gold market had been in a parabolic state, so when you throw a little pickup in yields along with the impasse on the stimulus bill, it was going to see a bit of a retracement,” said David Meger, director of metals trading at High Ridge Futures. “We might have gone a little too far, too fast, and we believe the market is in need of a pause, a consolidation. And that’s exactly what we are seeing.”
Why the fall?
{{/usCountry}}Why the fall?
{{/usCountry}}An uptick in US Treasury yields and a logjam over a stimulus bill in the United States to help the coronavirus-hit economy dented the metal’s allure on the global platform.
Poor economic data from far and wide, including disappointing US retail sales, also did not help safe-haven gold.
The benchmark US 10-year Treasury yield hovered near seven-week highs, while hopes for a fresh round of US coronavirus relief faded as Congress went into recess. Higher yields increase the opportunity cost of holding non-yielding assets such as bullion, which has climbed over 28 per cent so far this year.
Also under the scanner is the relationship between United States and China as presidential elections draw closer. President Trump, who is seeking a re-election bid, has stepped up his attacks on China, the latest being asking the Chinese owner of popular video-sharing app TikTok to sell its US assets.
Further, the four-day Democratic national convention is beginning in the United States from today where the presumptive presidential candidate Joe Biden is expected to spell out his strategy. That should also have some impact on the economic front.
Another record-high possible?
Some precious commodity watchers believe the rebound is expected to happen. “We’re going to hit the all-time highs again on the likelihood of a substantial stimulus package and the possibility of chaos around the election is going to drive people into a flight to safety,” said Jeffrey Sica, founder of Circle Squared Alternative Investments.
The gold traders are also waiting for updates on the Federal Reserve’s recent meeting, which is expected to shed some light on the policy stance of UC central bank. The details of the meeting are expected to be released later this week.