Gold Prices Fall by ₹700 Amid Ukraine-Russia Peace Hopes, Safe-Haven Demand Still Strong

New Delhi: Gold prices saw a significant drop of Rs 700, reaching Rs 90,550 per 10 grams in the national capital on Monday. This decline, as reported by the All India Sarafa Association, was primarily driven by ongoing selling pressure from jewelers and stockists. Traders continued to liquidate their long positions and book profits after the precious metal's recent rally. This drop comes amidst growing hopes for a potential peace deal between Russia and Ukraine, as discussions between Ukrainian and US officials took place in Saudi Arabia on Sunday. These talks are aimed at resolving the ongoing three-year conflict, which has eased some of the geopolitical risks, contributing to the fall in gold prices.

Gold Price Trends Over the Week

On Friday, gold had closed at Rs 91,250 per 10 grams, but prices fell further on Monday, marking a three-day consecutive decline. The price of gold with 99.5% purity decreased by Rs 700, settling at Rs 90,100 per 10 grams, compared to its previous closing of Rs 90,800 per 10 grams. Analysts suggest that with a reduction in geopolitical risk from the Russia-Ukraine conflict, gold’s appeal as a safe-haven asset has weakened slightly.

Safe-Haven Demand Remains Amid Middle East Tensions

Despite the fall in gold prices, demand for the yellow metal as a safe-haven investment remains strong. Chintan Mehta, CEO of Abans Financial Services, noted that while geopolitical risks related to the Russia-Ukraine conflict have eased, tensions in the Middle East continue to support gold's appeal. Israel has resumed airstrikes on Hamas in Gaza, maintaining the need for a secure asset like gold.

Silver Prices Rise as Investors Shift Focus

In contrast to gold, silver prices saw an increase on Monday, rising by Rs 200 to reach Rs 1,00,500 per kg, compared to the previous closing of Rs 1,00,300 per kg. This rise in silver prices reflects the broader market sentiment, as investors look for potential opportunities in precious metals despite the dip in gold prices.

Future Outlook: Rate Cuts and Macroeconomic Data Influence Bullion Markets

Chintan Mehta also mentioned that despite the recent drop, gold's bullish trend is expected to continue. This optimism is driven by expectations of deeper rate cuts from the US Federal Reserve. In addition, the market is awaiting key macroeconomic data, including the S&P Global Manufacturing PMI data and comments from Fed official Raphael Bostic. These factors are likely to provide further guidance on the future direction of monetary policy and bullion prices.

Global Gold Price Movements

On the global front, spot gold prices increased by 0.22%, reaching USD 3,028.90 per ounce, reflecting a continued interest in gold in the international markets, despite recent fluctuations.

The gold market remains volatile, but geopolitical uncertainties and the potential for changes in US monetary policy continue to play a pivotal role in shaping its trajectory.