12 May,2025 07:22 PM IST | New Delhi | mid-day online correspondent
A robust rally in equity markets further dented gold’s appeal as a safe-haven asset. Representational pic
Gold witnessed a sharp decline in prices on Monday, as traders shifted from safe-haven buying after the United States (US) announced a 90-day pause on tariffs against Chinese imports, PTI reported.
According to the All India Sarafa Association, gold of 99.5 per cent purity dropped by Rs 3,400 to Rs 96,100 per 10 grams on Monday. This marks the steepest decline in 10 months, with the last major fall being Rs 3,350 on July 23, 2024.
Gold of 99.9 and 99.5 per cent purity had previously settled at Rs 99,950 and Rs 99,500 per 10 grams, respectively, on Saturday, reported PTI.
"Gold prices fell sharply amid signs of progress in trade talks between the US and China, along with some relief in geopolitical tensions, including India-Pakistan," said Rahul Kalantri, Vice President - Commodities at Mehta Equities Ltd.
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Silver prices also declined, falling Rs 200 to settle at Rs 99,700 per kilogramme against Rs 99,900 recorded on Saturday.
The US, following trade talks held in Geneva over the weekend, agreed to reduce its 145 per cent tariff rate on Chinese goods to 30 per cent. In response, China consented to lower its tariffs on US goods to 10 per cent for a 90-day period.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, is trading higher by 1.42 per cent at 101.76, PTI reported.
In futures trading, the most active gold contract on the Multi Commodity Exchange (MCX) dropped by Rs 3,932 or 4.07 per cent to Rs 92,586 per 10 grams.
According to Jateen Trivedi, Vice President-Research Analyst (Commodity and Currency) at LKP Securities, easing geopolitical tensions have also contributed to the sell-off in gold. He noted: "Geopolitical tensions cooled with signs of a potential truce between Russia and Ukraine, and an understanding between India and Pakistan on military actions."
These developments prompted heavy profit-booking in gold, which had earlier rallied amid global uncertainty, Trivedi added.
A robust rally in equity markets further dented gold's appeal as a safe-haven asset.
Meanwhile, silver contracts for July delivery on the MCX dropped by Rs 2,295 or 2.37 per cent to Rs 94,434 per kilogramme.
In the international market, spot gold tumbled over 3 per cent to USD 3,218.70 per ounce, while spot silver fell by 1.19 per cent to USD 32.33 per ounce.
"Gold dips more than 2 per cent on long-liquidation/profit-booking amid easing geopolitical tensions and recovery in the greenback against major currencies," said Pranav Mer, Vice President, EBG-Commodity & Currency Research at JM Financial Services Ltd.
Later this week, investor attention will turn to key US macroeconomic data, including inflation, retail sales, and consumer sentiment. Markets will also be keeping an eye on the US Federal Reserve Chair Jerome Powell's speech for further guidance on the interest rate trajectory, Mer added.
(With PTI inputs)
