Gold and silver prices have seen a huge drop in the last week even amid the wedding season in the country when the demand for the precious metals generally go up. On November 27, gold became cheaper by Rs 1,578 per 10 gram as compared to November 20. At the same time, silver weakened by Rs 1,958 per kg. Between November 16 to 20, gold price fell by Rs 839 per 10 gram and that of silver by Rs 2,074 per kg.
On Friday, 24-carat gold closed at Rs 48,829 per 10 gram in bullion markets. Gold has become cheaper by Rs 7,425 per 10 gram from its peak in August. Gold price had reached Rs 56,254 per 10 gram on the morning of August 7 to its all-time high. On the same day, silver price reached Rs 76,008 per kg and by November 27, came down to Rs 60,069 per kg. During this period, silver became cheaper by Rs 15,939 per kg.
Reasons behind the decline
Gold prices are falling globally due to positive news about vaccines against the coronavirus disease (Covid-19) and experts say investors have towards stocks and away from gold amid the improvement in the global economy and easing of tensions between the US and China. There is no expectation of a sharp jump in gold prices in the near future.
According to Reuters, the attention has moved towards equities due to the weakening of the dollar, the hope of getting Covid-19 vaccine and recovery in the economy. This may further reduce the prices of gold. Rhona O’Connell, head of market analysis EMEA and Asia at StoneX Group Inc, pointed out that the vaccine is not a cure and that the rise in infection rates is a major concern, not only on humans but also on economic levels. O’Connell also said that negative interest rates will continue.
Gold prices will pick up
Anuj Gupta, deputy vice president of commodity and currency at Angel Broking, also reiterated that gold prices are falling globally due to positive news about the Covid-19 vaccine. Despite this, given the current low level, gold can reach Rs 57,000 to Rs 60,000 per 10 grams in the next one year. Gupta also said that investing in gold in the long term is a profitable deal. However, he added that one should check every aspect before investing in gold.
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