The decline comes even as the upcoming festive and wedding season is expected to provide some support to physical gold demand in India.
The October gold contract was trading at ₹1.52 lakh per 10 grams, down 0.40%, while silver was also trading lower in Wednesday’s session.
The near-term pressure comes against a backdrop of elevated global interest rates. The US Federal Reserve’s policy rate is currently at 3.75%-4%, with higher yields reducing the relative appeal of non-interest-bearing assets such as gold.
Gaurav Garg, Head of Research at Lemonn, said the stronger dollar and elevated US yields are keeping gold and silver under pressure. At the same time, softer crude prices are easing some inflationary pressure, while developments around US-Iran negotiations have reduced some immediate concerns over oil supply.
For Indian bullion prices, the rupee is another important variable.
Despite the near-term pressure, experts said India’s festive and wedding demand could offer some support to physical gold.
Darshan Desai, CEO of Aspect Bullion & Refinery, said buyers at elevated prices are becoming more selective and opting for staggered purchases. He expects festive and wedding demand to improve if prices stabilise.
Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions and President of the India Bullion and Jewellers Association, said gold and silver remain in bullish technical ranges despite the recent easing, while global rates, inflation and geopolitical developments are likely to continue driving volatility.
At the consumer level, the high price of gold is also changing buying patterns. Ravi Singh, Chief Research Officer at Master Capital Services, said consumers are increasingly opting for lighter jewellery and considering coins, ETFs and digital gold as alternatives to traditional jewellery, partly because of their lower ticket sizes.
Vikram Subburaj, CEO of Giottus, sees support for gold near ₹1.55 lakh per 10 grams, followed by ₹1.50 lakh per 10 grams, while resistance is placed around ₹1.53 lakh per 10 grams and ₹1.54 lakh per 10 grams.