Due to weak global cues and sluggish demand, precious metals lost their shine in the bullion market of the national capital on Tuesday. There was a huge fall in the prices of gold and silver, with silver falling by 2 percent. According to analysts, low liquidity due to holidays in Asian markets and investor caution ahead of geopolitical events have affected the market.
Price situation in domestic market
According to the data released by All India Bullion Association, on Tuesday the price of silver fell by Rs 5,000 or 2 percent and closed at Rs 2,45,000 per kg. Earlier on Monday it was at Rs 2,50,000 per kg. Heavy pressure was also seen in gold prices. Gold of 99.9 per cent purity fell by Rs 2,200 (1.4 per cent) to Rs 1,57,000 per 10 grams, having closed at Rs 1,59,200 in the previous session.
Holidays in China and global pressure became the reason
Market experts believe that one of the main reasons for this decline is the ‘Lunar New Year’ holidays in China. HDFC Securities commodity analyst Soumil Gandhi said participation from China, a major consumer of gold, was absent due to holidays. This reduced buying interest and increased selling pressure on prices. In the international market, gold failed to sustain the $5,000 level and traded 1.04 per cent lower at $4,938.70 an ounce, while silver fell 2.15 per cent to $74.96 an ounce.
Market keeps an eye on US-Iran talks and economic data
According to Praveen Singh, head of commodities at Mirae Asset Sharekhan, gold prices fell for the second consecutive day as investors turned cautious ahead of the US-Iran talks starting in Geneva on Tuesday. Apart from this, Kaveri More of Choice Broking said that America’s soft inflation data has fueled expectations of future interest rate cuts by the Federal Reserve, the effect of which is also visible on the market.
Expected trading in limited range
The market trend will now depend on upcoming economic data and geopolitical developments. Saumil Gandhi said the focus of market participants is now on the US ADP employment report and US-led talks between Russia-Ukraine. The outcome of these events will affect risk perception and demand for safe investments. He also added that unless speculative sentiment returns decisively, prices are likely to remain range-bound in the near term.