Home >Markets >Commodities >Gold prices drop for second week in a row, down 6000 from record highs
Customer looks at gold earrings at a jewellery showroom during Dhanteras, a Hindu festival associated with Lakshmi, the goddess of wealth, amidst the spread of COVID-19 in Mumbai, India, November 13, 2020. REUTERS/Niharika Kulkarni (REUTERS)
Customer looks at gold earrings at a jewellery showroom during Dhanteras, a Hindu festival associated with Lakshmi, the goddess of wealth, amidst the spread of COVID-19 in Mumbai, India, November 13, 2020. REUTERS/Niharika Kulkarni (REUTERS)

Gold prices drop for second week in a row, down 6000 from record highs

  • The recent price drop in gold has helped jewellery demand in India: Reports
  • Silver fell 1,500 per kg this week

Gold prices in India fell for the second week in a row as optimism about covid vaccine and uncertainty over US stimulus package dented global rates. On Friday, gold futures on MCX ended 0.5% higher to 50,260 per 10 gram while silver settled 1.2% higher at 62,260 per kg. However, for the week, gold prices ended about 700 per 10 gram lower in Indian markets while silver fell 1,500 per kg.

The price correction helped boost buying in India's retail gold market this week, Reuters reported, though premiums eased slightly from a week ago. Dealers charged premiums of about $2 an ounce over official domestic prices, down from $4 last week. Gold prices in India include 12.5% import and 3% GST.

In August, gold had hit a record high of 56,200 per 10 gram.

Jewellery maker Titan Company this week reported reported growth in businesses during the festive season. "The jewellery business witnessed a mid-teens growth (around 15 per cent) for the 30 day festive season starting from Dussehra till Diwali over the corresponding period last year, with a decent recovery in studded jewellery sales," the company said in a business update.

In global markets, gold edged higher on Friday after US Treasury Secretary Steven Mnuchin signalled that negotiations on stimulus measures will continue, boosting the metal's appeal as a hedge against likely inflation. Spot gold rose to $1,871.99 per ounce but on a weekly basis edged 0.8% lower.

However, global gold rates have dipped about 5% since positive reports on COVID-19 vaccines from Pfizer and Moderna in the past 12 days. Gold has mainly benefited this year on the back of damage to economies from the pandemic and the resultant global stimulus. Gold is viewed by many as a safe haven asset, inevitably driven higher in times of turmoil.

"Prices continue to be choppy inside $1900-1850 levels and breaking any of the sides would suggest fresh direction the commodity. MCX gold faces resistance at 51,220 while has support at 49,460," Geojit Financial Services said in a note.

Investors pulled $4 billion from gold, the biggest outflow ever, amid a rush for riskier assets last week, BofA said on Friday. (With Agency Inputs)

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