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After hitting a record high, gold prices dipped by ₹994 to ₹62,287 per 10 grams on back of bearish trend globally even the undertone remains ‘cautiously optimistic’.
Gold prices in the domestic markets have rallied by ₹1,319 per 10 gram from ₹60,888 on November 20 amid huge volatility.
On MCX, gold for February delivery was down at ₹62,319 against ₹62,369 on Monday tracking the bearish global trend.
Globally, the yellow metal saw an abnormally huge jump with spot prices briefly hitting a lifetime high of $2,148.78 an ounce on Monday but tumbled to $2,031 on profit booking.
Rate hike unlikely
There has been growing consensus that the rate hiking cycle in the US is close to coming to an end given softer labour market data and slowing inflation numbers in the US economy.
The US Fed is expected to leave rates unchanged at 5.25 per cent to 5.50 per cent at its meeting this month and cut the cumulative interest rate by 1.25 bps by December 2024, with the first cut expected next March 2024.
The renewed expectations of softer Fed policy next year are driving down US bond yields and dollar while driving up gold prices.
Vulnerable to reversal
Ghazal Jain, Fund Manager-Alternative Investments, Quantum Asset Management Company, said while the US interest rates might have peaked, the rise in gold prices is vulnerable to a reversal in the short term in case US Fed stance goes against market expectations.
Despite high prices, India imported imported 123 tonnes of the yellow metal in October against 77 tonnes logged in the same period last year as jewellers replenished their inventory ahead of Dhanteras and wedding season buys.
The average monthly imports in October in the past decade were around 66 tonnes. In value terms, October imports nearly doubled to $7.23 billion from $3.7 billion a year earlier due to high prices.
Suvankar Sen, Managing Director, Senco Gold Diamonds, said with the sharp run-up in prices the jewellery demand was soft volume-wise, but buying for wedding and other special occasions continued as consumers want to purchase before the prices go up further.
“We are also seeing good demand for light-weight jewellery. Youngsters are also showing interest in buying diamond jewellery as diamond prices have come down substantially,” he added.
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