Gold prices fall further, down ₹4,000 in 3 weeks; silver rates tumble1 min read . Updated: 28 Nov 2020, 10:37 AM IST
- Progress on covid vaccine front and easing political chaos in the US have put pressure on gold prices
- Despite the recent correction in gold rates, bullion is up over 20% so far this year in Indian markets
Gold and silver prices continued their fall in Indian markets this week, tracking weak global cues. On MCX, gold futures fell 0.85% on Friday to settle at ₹48,106 per 10 gram while silver futures dropped 1.3% to ₹59,100 per kg. In about three weeks, gold prices have tumbled about ₹4,000 per 10 gram while silver ₹6,000 per kg as optimism about covid vaccine has sparked a rally in risk assets.
Positive vaccine developments, which started at the beginning of the month with the Pfizer Inc. announcement, have seen bullion on a downward path even though there are uncertainties surrounding the shots.
A global stock index on Friday touched a record high for the third session this week. Global gold prices slumped as much as 2% to $1,773 on Friday, breaking below the key $1,800 support level, to a near five-month trough, as growing optimism about a quick vaccine-fuelled economic recovery and a smooth White House transition.
Further weighing on gold rates, investors bet on calmer global trade regime under a Joe Biden administration in the United States.
"Risk sentiment has improved lately on back of progress on vaccine front, easing political chaos in US and hopes of additional stimulus measures. However, weighing on market sentiment is rising virus cases and uneven global economic recovery," Kotak Securities said.
Despite the recent correction in gold prices, bullion is up over 20% so far this year and many analysts still believe that ultra-low interest rates and prospects of more stimulus will help support gold prices.
Meanwhile, industrial metal copper surged to a seven-year high in London trade, highlighting the divergence between gold and copper, which is seen as a bellwether for the global economy.
Gold's steep decline is in line with continued outflows of from global gold exchange-traded funds, which are now headed for their first monthly outflow this year. The funds have been a crucial support pillar for bullion in 2020, so their current erosion has significant implications for the price.