Gold prices declined by ₹350 to ₹73,800 per 10 grams in the national capital on Friday (August 23), according to the All India Sarafa Association. This drop follows the previous session’s trading price of ₹74,150 per 10 grams for gold of 99.9% purity.

The recent decline in gold prices is attributed to rising US Treasury yields and a recovery in the dollar index.

Market experts noted that the yellow metal’s losses were further influenced by the Reserve Bank of India’s (RBI) recent Monetary Policy Committee (MPC) minutes.

RBI Governor Shaktikanta Das indicated that the current policy rate of 6.5% is considered balanced, and any calls for policy easing might be premature.

While two MPC members advocated for a rate cut, the majority supported maintaining the status quo.

Globally, gold futures at Comex gained $18.20, trading at $2,534.90 per ounce.

Minutes from the US Federal Reserve’s July meeting showed a strong inclination towards a rate cut next month, supported by at least two Fed officials.

However, speculators have adjusted their expectations, now pricing in three 25-basis-point cuts across the remaining Fed policy meetings this year, down from four cuts priced earlier.

This adjustment led to a recovery in Treasury yields and the dollar index.

“Speculators had previously overstated the likelihood of an aggressive rate cut this year. They have now trimmed their bets, adjusting their expectations for the remaining Fed meetings,” Prathamesh Mallya, DVP – Research, Non-Agri Commodities and Currencies at Angel One, was quoted as saying in a PTI report.

Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities, highlighted that gold prices had remained positive after a strong rally last week.

“The depreciation of the dollar, influenced by other currencies performing well against the rupee, has supported gold prices and investor confidence in gold as a safe-haven asset,” he said.

Investment outlook

Given the current market conditions, where gold prices have recently experienced a decline but are influenced by favorable economic indicators and a weakening dollar, potential investors might consider buying gold.

The strong rally over the past week and the anticipation of interest rate cuts suggest that gold could continue to appreciate.

However, investors should remain cautious of market volatility and geopolitical factors that could impact prices.

Selling might be advisable if gold prices peak or if there is a significant shift in economic indicators suggesting a potential downturn.