On the Multi Commodity Exchange (MCX), gold futures for October delivery fell ₹636, or 0.41%, to ₹1.53 lakh per 10 grams. The contract recorded a business turnover of 837 lots.
Silver futures for September delivery declined ₹4,023, or 1.73%, to ₹2.28 lakh per kg, with a business turnover of 2,577 lots.
Why are gold and silver prices falling in India?
The fall in domestic gold prices was attributed to weak spot demand, while silver prices came under pressure as market participants reduced their positions.
The domestic futures market also needs to be viewed separately from international spot prices, which can move differently during the day because of changes in the dollar, US bond yields, interest-rate expectations and local currency movements.
Globally, gold futures were up 0.10% at around $4,338.74 an ounce in New York, while silver gained 0.99% to $62.74 an ounce.
According to Gaurav Garg, Head of Research at Lemonn, gold was showing some recovery after the previous session’s decline, helped by easing US Treasury yields. However, investors remained cautious ahead of the release of the US Federal Reserve meeting minutes, which could offer clues on the future path of interest rates.
What does this mean for gold demand in India?
The fall in prices does not necessarily indicate a sharp decline in consumer interest in gold. Demand can also shift towards smaller purchases when prices remain elevated.
Kaushlendra Sinha, CEO of the Indian Association for Gold Excellence and Standards (IAGES), said consumers continue to have a strong affinity for gold, although buyers are increasingly opting for lightweight and trendy jewellery as prices remain high.
He also said some households are choosing to exchange or redesign jewellery they already own instead of purchasing new gold. This allows consumers to unlock the value of existing holdings while limiting the amount of fresh gold they need to buy.
With the festive and wedding season approaching, demand could remain an important factor for the domestic gold market. However, the direction of gold and silver prices will also depend on global interest-rate expectations, US Treasury yields, the dollar and movements in the rupee.
For consumers, MCX futures prices are not the same as the final retail jewellery price. Retail gold prices also include factors such as taxes, making charges and the jeweller’s margin. Similarly, silver rates can vary across cities and between physical and futures markets.
-With agencies inputs
