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Gold Prices Drop by ₹5,000: Will They Fall Further?

Udaipur Kiran Hindi November 16, 2024 09:42 PM

Gold prices in India have taken a significant dip, much to the relief of buyers across the nation. Following a historic turn of events in the U.S. presidential elections, where Donald Trump secured a dramatic victory, the price of gold has dropped by nearly ₹5,000 per 10 grams. This sharp decline has left experts and consumers alike wondering: will the prices fall even further?

Gold Loses Its Glitter: A ₹5,000 Plunge

According to data from the India Bullion and Jewellers Association, the price of gold was ₹78,566 per 10 grams on November 6, the day Donald Trump claimed victory. Fast forward to November 14, and the price has slumped to ₹73,740—a steep fall of ₹4,826, or over 6%.

This decline comes at a time when many Indian households, gearing up for wedding season and festive celebrations, are finding solace in the cheaper rates. But what’s causing this sudden dip?

Why Is Gold Losing Value?

Experts point to several global and domestic factors driving this downtrend:

Strengthening U.S. Dollar
The U.S. dollar has surged significantly following expectations of an impending tariff war under Trump’s presidency. A stronger dollar makes gold more expensive for buyers using other currencies, reducing demand globally and subsequently driving prices down.

Rising Interest Rates in the U.S.
The Federal Reserve’s cautious stance on aggressive interest rate cuts is another critical factor. With inflation nearing the Fed’s target, treasury bonds are offering higher returns, making them a more attractive investment than gold, which does not pay dividends or interest.

Stock Market and Cryptocurrency Boom
Gold, traditionally seen as a safe-haven investment, is losing its appeal as investors flock to the booming stock market and cryptocurrencies like Bitcoin. These investments promise higher returns, diverting attention away from the yellow metal.

Global Economic Tensions
The ongoing trade war and tariffs have created uncertainty in global markets. While such scenarios often boost gold prices, the simultaneous rally in the U.S. dollar has overshadowed gold’s safe-haven appeal.

Will Gold Prices Fall Further?

The million-dollar question now is: how much lower will gold go?

Jatin Trivedi, Senior Research Analyst at LKP Securities, believes there’s potential for further declines. “Sellers are dominating the market, and there are no visible positive triggers in the near term,” he said. Trivedi predicts continued pressure on gold as the Federal Reserve maintains its current stance on interest rates and inflation control.

Sandeep Raichura, CEO of PL Broking, echoes similar sentiments. “The tariff war and strong dollar are creating a perfect storm for gold prices to slide further,” he stated. This combination of global economic factors and investor sentiment suggests that gold’s downtrend might not end anytime soon.

What Does This Mean for Buyers?

For Indian consumers, particularly those planning weddings or major purchases, this decline offers a golden opportunity. Lower prices mean now might be the perfect time to invest in gold jewelry or coins, especially with uncertainty looming over future trends.

However, for long-term investors, caution is key. With treasury bonds and equities offering better returns, the short-term appeal of gold as an investment may fade.