On the Multi Commodity Exchange (MCX), gold futures for August delivery fell by ₹499, or 0.35%, to ₹1.41 lakh per 10 grams. Silver futures for September delivery declined by ₹1,153, or 0.52%, to ₹2.19 lakh per kilogram.
Analysts said weaker physical demand and a reduction in fresh buying contributed to the decline in domestic prices.
Why are gold and silver prices falling?
Globally, gold futures were down 0.71% at $4,031 per ounce during the session in New York, reflecting weaker sentiment in international markets. Silver, however, traded 1.23% higher at $57.08 per ounce.
According to Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions, precious metals remain under pressure as investors assess escalating tensions in the West Asia alongside expectations for US monetary policy.
He said geopolitical risks have revived concerns that higher oil prices could complicate the US Federal Reserve’s inflation outlook, even as recent US consumer and producer price data pointed to easing inflationary pressures.
Kothari added that from a technical perspective, gold’s near-term direction will depend on developments in the West Asia, with the $4,000-per-ounce level acting as a key support.
Why has the decline been limited in India?
While international gold prices have corrected, the depreciation of the Indian rupee has softened the impact on domestic prices.
Priti Rathi Gupta, Founder of Lxme, said the rupee’s weakness against the US dollar has limited the decline in local gold prices, making the correction in India smaller than the fall seen in dollar-denominated international prices.
She said the long-term investment case for gold remains intact, supported by continued purchases by central banks, its role as a hedge against inflation and protection against rupee depreciation.
Should investors prefer gold or silver?
Gupta noted that gold and silver play different roles in an investment portfolio.
Gold is primarily considered a store of value and a defensive asset, while silver derives a significant share of its demand from industrial sectors such as solar energy, electronics and electric vehicles. As a result, silver tends to experience sharper price swings than gold and is more closely linked to global manufacturing activity.
Given the volatility ahead of the US Federal Reserve’s July policy meeting, she said investors may consider investing in gold through a staggered SIP approach rather than making lump-sum investments. She added that any allocation to silver should remain limited and be viewed as a tactical investment rather than a core portfolio holding.
