Amid poor global indications, gold prices fell by ₹110 to ₹59,240 per 10 grams in Delhi on Friday. The price of the precious metal for 10 grams had previously traded at ₹59,350. Likewise, the price of silver fell by ₹600 to ₹71,500 per kilogram.
At the close of trading, the benchmark stock indices Sensex and Nifty experienced declines due to profit-taking in financial, IT, and oil shares. The Sensex, representing the Bombay Stock Exchange (BSE), fell sharply by 505.19 points or 0.77 percent, settling at 65,280.45 points. Among its constituents, 25 ended in the red while five showed gains. Throughout the day, the Sensex fluctuated between the levels of 65,175.74 and 65,898.98.
Similarly, the broader Nifty index of the National Stock Exchange (NSE) also witnessed a decline, ending its eight-day winning streak. The Nifty dropped by 165.50 points or 0.85 percent, settling at 19,331.80. Out of the Nifty’s constituents, 44 shares declined, while only six recorded gains. This downward movement in the stock market was influenced by both profit-taking activities and weak global trends.
In the international market the gold prices edged lower on Friday but were on track for a fourth consecutive weekly loss as strong U.S. jobs data strengthened bets for higher-for-longer interest rates by the Federal Reserve.
Spot gold experienced a slight increase of 0.3% and reached $1,915.79 per ounce. Analysts attribute this small uptick to bargain hunting, suggesting that investors took advantage of lower prices. Similarly, U.S. gold futures also rose by 0.3% and reached $1,921.80.
However, gold has declined by approximately 0.2% throughout the week. Investors have expressed their expectations of interest rates being in the range of 5.25% to 5.5% for 2023. They also anticipate that any possibility of interest rate cuts would only occur well into 2024, as indicated by the CME’s Fedwatch tool.
Recent data released on Thursday revealed an increase in the number of people filing new claims for unemployment benefits, indicating a potential rise in joblessness. On the other hand, private payrolls experienced a significant surge in June, highlighting the presence of a robust labor market.
“The resilience of the U.S. economy, mirrored in a sturdy U.S. dollar and a renewed rise in U.S. bond yields, is weighing on gold and silver,” Julius Baer analyst Carsten Menke said.
“Short-term and speculative traders have lost confidence in their calls of a rapid reversal of U.S. monetary policy, while selling from safe-haven seekers has picked up again.”
According to the President of the Federal Bank of Dallas, Lorie Logan, there was a possibility of an interest rate increase during the June policy meeting. Investors are now eagerly awaiting the employment report from the Labour Department to gain further confirmation regarding the Federal Reserve’s likely strategy. A recent survey conducted by Reuters among economists indicated that nonfarm payrolls are expected to have increased by 225,000 jobs last month, following a rise of 339,000 in May.
In the meantime, the benchmark 10-year Treasury yields in the United States were on track to experience their largest weekly rise since mid-May. This increase in yields has diminished the attractiveness of non-yielding bullion investments. As a result, spot silver saw a decline of 0.2% to $22.71 per ounce, while platinum rose by 0.7% to $908.09 and palladium decreased by 0.9% to $1,230.12.
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Updated: 07 Jul 2023, 06:00 PM IST