Gold and silver experienced sharp declines in the futures market on Monday, mirroring the weakness observed in global bullion markets. This downturn was driven by increasing optimism surrounding a potential US-China trade deal and the strengthening of the US dollar, both of which reduced demand for the safe-haven asset.
On the Multi Commodity Exchange (MCX), gold futures for December delivery declined by Rs 1,546, representing a 1.25 per cent drop, to reach Rs 1,21,905 per 10 grams. This occurred amid a business turnover of 12,428 lots.
Over the holiday-shortened week, the yellow metal had already lost Rs 3,557, equivalent to a 2.80 per cent decrease.
"Gold prices continue to decline as safe-haven demand weakens amid optimism over a potential US-China trade deal and a stronger US dollar," Darshan Desai, CEO of Aspect Bullion & Refinery, said. The dollar index, which gauges the greenback's value against a basket of six major currencies, edged up marginally by 0.03 per cent to 98.98.
Silver futures on the MCX also suffered significant losses. The white metal for December delivery fell sharply by Rs 1,964, or 1.33 per cent, to Rs 1,45,506 per kilogram, with a business turnover of 20,367 lots. During the past week, it had already plunged by Rs 9,134, marking a 5.83 per cent decline.
In international markets, Comex gold futures for December delivery decreased by USD 61.69, or 1.49 per cent, to USD 4,076.11 per ounce on Monday.
"Gold prices fell to around USD 4,070 per ounce on Monday, extending Friday's decline, as progress in US-China trade talks dampened demand for safe-haven assets," Jigar Trivedi, Senior Research Analyst at Reliance Securities, said.
Following two days of discussions in Malaysia, leading negotiators from both Washington and Beijing achieved a preliminary consensus on critical issues, including export controls, fentanyl trafficking, agricultural trade, and shipping levies.
These talks have set the stage for US President Donald Trump and Chinese President Xi Jinping to finalise a deal at their upcoming meeting in South Korea later this week, Trivedi added.
Comex silver futures for December delivery were trading 1.44 per cent lower at USD 47.88 per ounce.
Darshan Desai of Aspect Bullion & Refinery cautioned that investors considering gold as a hedge should prepare for short-term volatility and sharp price swings. Positive news on the trade deal or further gains in the US dollar could prompt more profit-taking in gold.
Jigar Trivedi of Reliance Securities added that traders are also focused on major central bank decisions this week, with the Federal Reserve widely expected to cut rates by 25 basis points after softer-than-expected inflation data, while European Central Bank and the Bank of Japan are likely to keep policy rates steady.
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