Gold price dips by Rs 170, silver plunges by Rs 1,850 due to weak demand

Gold prices in India dropped by Rs 170 to Rs 78,130 per 10 grams on Friday, continuing a three-day decline. Silver prices also saw a significant drop, plunging by Rs 1,850 to Rs 88,150 per kg due to weak demand from industrial units and coin makers, as reported by the All India Sarafa Association.

On Thursday, gold with 99.9 percent purity closed at Rs 78,300 per 10 grams. The decline is attributed to tepid demand from local jewellers and stockists.

Silver, which was priced at Rs 90,000 per kg in the previous session, experienced reduced offtake, leading to the steep drop.

The price of gold with 99.5 percent purity also decreased by Rs 170, settling at Rs 77,730 per 10 grams from the previous close of Rs 77,900 per 10 grams.

In futures trading on the Multi Commodity Exchange (MCX), gold contracts for February delivery saw a slight increase of Rs 50 or 0.07 percent, trading at Rs 75,701 per 10 grams on Friday.

"Gold witnessed minor buying as the USD 2,600-level on Comex acted as a temporary support, alongside Rs 75,500 in the domestic MCX market. The momentum remains volatile due to uncertainties surrounding the interest rate cycle. Although the Fed decided to keep rates lower, its projections indicated fewer rate cuts going forward, which has maintained pressure on gold prices for the past two days," said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities.

Meanwhile, silver futures contracts for March delivery on the MCX fell by Rs 647 or 0.74 percent, trading at Rs 86,540 per kg.

Globally, Comex gold futures rose by USD 13.10, reaching USD 2,621.20 per ounce.

"Market players will watch the core Personal Consumption Expenditures (PCE) prices index data due later today, and more selling will be witnessed in precious metals counters if the actual figure comes above estimates," noted Saumil Gandhi, Senior Analyst - Commodities at HDFC Securities.

According to Kotak Securities, Comex gold futures saw some recovery, trading near USD 2,620 per ounce on Friday. However, they are headed for a weekly decline as investors reassess interest rate expectations following the US Federal Reserve's latest decision. Despite a rate cut, Fed Chair Powell's emphasis on continued inflation progress tempered expectations for further easing. Resilient economic data, including upwardly revised consumer spending, weakened the case for imminent rate cuts, the brokerage firm added.

In the overseas market, silver quoted 0.41 percent lower at USD 29.29 per ounce.

"With central banks actively accumulating gold to hedge against global risks and rising geopolitical tensions, including heightened unrest in the Middle East and uncertainty surrounding economic policies under Trump's presidency next month, the long-term outlook for the yellow metal remains highly attractive as a safe-haven asset," said Chintan Mehta, CEO of Abans Holdings.