Gold and silver prices have seen a decline in the domestic market. According to Manish Sharma, a member of the Indian Bullion Jewelers Association, the rate had decreased to ₹67,040 per 10 grams on Wednesday (July 31), marking a fall of ₹1,320 per 10 grams.

Similarly, silver prices have fallen from ₹89,500 per kilogram on Tuesday evening to ₹89,000 per kilogram on Wednesday.

International market trends

In contrast, international gold prices have risen significantly.

On Wednesday, gold prices in Asian markets saw an increase, driven by a softer dollar and ongoing geopolitical tensions.

Spot gold rose 0.3% to $2,419.11 per ounce, while December gold futures were up 0.5% at $2,463.85 per ounce by 01:09 ET (05:09 GMT).

The rise in global gold prices is attributed to safe-haven buying, especially following the reported killing of Hamas leader Ismail Haniyeh by an Israeli strike, which has heightened concerns about escalating conflicts in the Middle East.

Why the discrepancy?

The decline in domestic gold and silver prices amidst rising international rates can be attributed to several factors:

Domestic market dynamics: The cut in gold import duties in India has led to a four-month low in local gold prices, stimulating a surge in demand.

This, coupled with the appreciation of the rupee, might be contributing to the current domestic price drop.

Global market influences: Internationally, gold prices are benefiting from a softer dollar and increased safe-haven buying due to geopolitical uncertainties.

Renisha Chainani, Head Research at Augmont, noted, “Gold prices have risen to a one-week high in international markets amid geopolitical tensions. Additionally, a recent cut in India’s gold import duty has led to a four-month low in domestic gold prices, spiking demand. Dealers in India are now requesting premiums of up to $20 per ounce over official rates, the highest in a decade. Gold prices have rebounded from last week’s low of $2,350 per ounce (₹67,400 per 10 grams) and are moving towards $2,460 per ounce (₹69,000 per 10 grams).”

Future market trends

Experts anticipate the upcoming decision from the US Federal Reserve, which will be announced late Wednesday.

Although no immediate interest rate cuts are expected, the market is hopeful for a reduction in rates by September.

Domestic market forecasts suggest gold prices could rise to ₹72,000 per 10 grams.

Kishore Narne, a market expert, predicts that gold prices could reach $2,600 per ounce, according to CNBC Aawaz report.

According to the World Gold Council, demand for gold jewelry, bars, and coins is expected to increase by an additional 50 tons by December, potentially driving prices higher.

Investment advice

Given the current trends, experts suggest these for investors:

Evaluate buying opportunities: The drop in domestic gold and silver prices could present a buying opportunity, especially if investors believe in the long-term value of these assets.

With international prices rising, investing now might be advantageous.

Monitor global trends: One should stay informed about global market movements and geopolitical developments, as these can impact domestic prices.

The rise in international gold prices indicates potential for future price increases.

Diversify portfolio: As always, diversification is key to managing investment risk.

Investors can consider including a mix of assets in their portfolio, with gold and silver as part of a broader investment strategy.