Gold prices fall on Thursday (July 25), continuing a downward trend that began following Finance Minister Nirmala Sitharaman’s announcement of a reduction in Customs duty on gold, silver and platinum.

The cut, from 15% to 6%, was intended to lower gold prices, which had been at record highs.

Domestic trends

On July 25, 2024, 22K gold prices in India fell by ₹950 to ₹64,000 per 10 grams, and the price for 100 grams dropped by ₹9,500 to ₹6,40,000.

This decline represents a 1.48% decrease in prices from the previous day, according to Goodreturns data.

Global market

Globally, gold prices fell more than 1% on Thursday.

Spot gold was down 1.2% to $2,369.20 per ounce, while US gold futures declined 1.8% to $2,373.00.

The drop is attributed to profit-taking as investors await US economic data, including GDP and personal consumption expenditures (PCE) reports.

These reports are anticipated to provide clues on potential Federal Reserve interest rate cuts.

Kelvin Wong, Senior Market Analyst for Asia Pacific at OANDA, was quoted as saying in a Reuters report, “When you look from a fundamental perspective, there are no factors pressuring gold. So, it looks like we are seeing some profit-taking and from a technical perspective, prices could move lower.”

Investment outlook

The outlook for gold remains mixed.

Analysts are closely watching upcoming US data for indications of future Federal Reserve rate cuts.

A rate cut could enhance gold’s appeal as a non-yielding asset.

According to the CME FedWatch Tool, there is a 96% chance of a 25 basis point rate cut in September.

A reduction in rates would likely boost gold prices.

Rahul Kalantri, VP Commodities at Mehta Equities said, “Gold and silver prices exhibited considerable volatility. A sharp reduction in India’s import duty on gold and silver is expected to boost retail demand. We anticipate some support for prices if the Fed delivers on expected rate cuts.”

However, In India, the reduction in Customs duty is seen as a move to drive down retail prices and reduce grey market activity.

Vikas Singh, Managing Director & CEO of MMTC-PAMP, stated, “Gold in India is more than just a precious metal. The reduction in duty is expected to drive down retail prices and stimulate consumption.”

Globally, silver has also experienced a drop, with prices falling 4.2% to $27.78 per ounce.

Other precious metals, including platinum and palladium, have seen decreases as well.