Gold prices set for biggest annual fall in 6 years, down ₹9000 from all-time highs

Gold prices in global markets are set to record its worst performance in six years as rates today dipped below key support level of $1,800. Spot gold today fell 0.4% to $1,796.47 per ounce, pressured by a higher dollar and firm Treasury yields. It’s down more than 5% this year in global markets. Spot silver dipped 0.8% to $22.62 an ounce, platinum eased 0.7% to $961.35, and palladium fell 1.2% to $1,960.31, all set for their worst showing in several years.

In Indian markets, gold prices were today down 0.4% to ₹47,650 per 10 gram and is set to close on a flat note as compared to a year-to-date basis. The precious metal has been trading in a narrow range over the past one month, with analysts saying that gold has been caught between Omicron and inflation concerns and US Federal Reserve's tapering move. 

“Gold continues to trade within the $1780-1820/oz range seen for last few days amid lack of fresh cues and lower trade volumes due to year-end holidays. Support from weaker US dollar and persisting virus risks and China concerns are countered by sharp rise in US bond yields and weaker investor interest. Gold may remain choppy trade reflecting larger market however higher yields may keep prices under pressure,” said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

After a stellar run up in 2020 when the yellow metal touched a record high of ₹56,200 on the MCX in August, the prices are down about ₹9,000 from those levels. 

CommTrendz Co-Founder and CEO Gnanasekar Thiagarajan said the reason behind the underperformance this year was the rush of liquidity in the equity markets.

According to him, tightening of rates would make the US dollar more appealing relative to currencies bound for relatively looser monetary policies such as the euro and yen.

In the near term, “we expect to see choppy trade reflecting the larger financial market amid lower year-end trading participation however general optimism about US economy and Fed’s tightening expectations may keep US dollar supported and this may keep pressure on gold,” Kotak Securities said in a note.  (With Agency Inputs)