Why Are Gold and Silver Prices Falling?
According to the All India Sarafa Association, the persistent fall in gold prices is linked to waning safe-haven demand. The recent US-EU trade agreement has calmed market nerves, prompting investors to shift their capital away from gold — traditionally viewed as a hedge against economic and geopolitical uncertainty.
“This latest correction is a result of reduced risk perception,” says Saumil Gandhi, Senior Commodities Analyst at HDFC Securities. “When fears ease — such as around tariffs or political tensions — the appetite for gold tends to shrink.”
Gold of 99.9% purity, which traded at ₹98,520 per 10 grams over the weekend, slid to ₹98,020 on Monday. Meanwhile, slightly lower-purity gold (99.5%) fell to ₹97,750, inclusive of all taxes. Silver, which was at ₹1,14,000 per kg on Saturday, dipped to ₹1,13,000.
Global Markets Flat, Dollar Strength a Key Factor
On the international front, spot gold and silver remained largely flat, trading at $3,337.95 and $38.17 per ounce, respectively. Analysts note that global bullion prices are finding it hard to gain traction due to a stronger US dollar.
“The dollar index has risen for three straight days,” says Jateen Trivedi, VP Research Analyst at LKP Securities. “This strength is capping any upward movement in gold despite global uncertainties.”
Chintan Mehta, CEO of Abans Financial Services, points out that investors are now closely watching key US economic data, including jobless claims and Q2 GDP figures. “These indicators will help shape expectations around future interest rates and Fed policy, which are critical drivers for gold prices,” he adds.
US Trade Policy and Fed Dynamics at Play
The easing of trade tensions stems from the recent US-EU agreement, which imposes a 15% tariff on most European goods entering the US while the EU pledges increased investment in American industries. A similar deal was reached with Japan just a week earlier. These developments have tempered the fear-driven buying in the bullion market.
Adding to the dollar’s momentum, US President Donald Trump’s recent comments reaffirming the Federal Reserve’s independence — and a softened stance towards Fed Chair Jerome Powell — have reassured investors about policy stability.
“These comments have stabilized expectations and reduced the need for hedging via gold,” explains Gandhi.
What Lies Ahead for Precious Metals?
While the short-term trend appears bearish for both gold and silver, experts believe that market sentiment could shift again depending on upcoming US economic data and any geopolitical shocks.
“Investors should not panic,” advises Trivedi. “Precious metals have always been cyclical. As long as global uncertainty persists, gold will continue to serve as a long-term hedge.”
Bottom Line:
Gold and silver prices are declining amid easing global tensions, strong US dollar performance, and reduced demand for safe-haven assets. However, with macroeconomic data releases on the horizon, the precious metals market may not stay quiet for long. Investors are advised to stay informed and take a long-term view when it comes to gold exposure.
Disclaimer: This article is based on market data and expert commentary. Please consult a certified financial advisor before making investment decisions.