On November 30, the Indian bullion market witnessed a significant drop in gold prices, while silver experienced a modest increase. According to the India Bullion and Jewellers Association (IBJA), the price of 10 grams of gold decreased by ₹1,009, settling at ₹1,19,619, while this decline is noteworthy for both investors and consumers, particularly after the festive season.
Current Market Snapshot
Yesterday, on Wednesday, gold was priced at ₹1,20,628 per 10 grams, marking today's drop of ₹1,009, while in contrast, silver prices saw an increase of ₹150, bringing its rate to ₹1,46,783 per kilogram. On October 29, the price of silver was ₹1,46,633 per kilogram, while this indicates a divergent trend where gold has seen a sharp fall, while silver has managed to strengthen its position slightly.
Significant Drop from All-Time Highs
Earlier this month, on October 17, both gold and silver touched their all-time high levels. On that day, gold reached ₹1,30,874 per 10 grams, and silver hit ₹1,71,275 per kilogram, while since reaching these peaks, gold has become cheaper by ₹11,255 in just 13 days, and silver has seen a more substantial reduction of ₹24,492. This significant correction in prices signals a notable shift in the market, presenting both opportunities and risks for investors.
Key Factors Behind the Decline
Several primary factors are contributing to this recent downturn in gold and silver prices. These include the conclusion of seasonal buying in India, a reduction in global tensions, and profit-taking by investors, while the combined effect of these elements is clearly visible in the prices of these precious metals.
End of Seasonal Buying in India
During major festivals like Diwali in India, there is a substantial surge in the purchase of gold and silver. After these festive periods, the buying spree typically subsides, leading to a decrease in demand. This reduction in demand directly impacts prices, as lower demand tends to push prices downwards, while this is a seasonal pattern observed annually in the Indian market.
Easing Global Tensions
Gold and silver are traditionally considered 'safe-haven' assets. This means that during times of economic or geopolitical uncertainty, investors tend to flock to these metals to safeguard their capital. The recent easing of global tensions has reduced the impetus for investors to seek. 'safe-haven' assets, thereby putting downward pressure on the demand and prices of these metals.
Following a sustained rally in prices, many investors begin to book profits on their investments. This phenomenon is known as 'profit-taking, while ' On top of that, technical indicators such as the Relative Strength Index (RSI) were signaling that prices had entered an 'overbought' zone, meaning they had risen beyond their intrinsic value. In response to such signals, trend followers and dealers initiated sell-offs, contributing to the price decline.
Year-to-Date Performance of Gold and Silver
Despite the current dip, gold and silver prices have shown remarkable growth this year. As of December 31, 2024, 10 grams of 24-carat gold were priced at ₹76,162, which has now increased to ₹1,19,253, marking a rise of ₹43,457. Similarly, silver prices have also surged by ₹60,766 during this period. On December 31, 2024, one kilogram of silver was valued at ₹86,017, which has now reached ₹1,46,783 per kilogram, while this indicates that, over the long term, these metals continue to be attractive investments.
Significance of IBJA Rates
The gold prices released by the India Bullion and Jewellers Association (IBJA) don't include 3% GST, making charges, or jeweler's margin. This is why retail gold prices in cities differ from the rates declared by IBJA. These IBJA rates are utilized by the Reserve Bank of. India (RBI) to determine the rates for Sovereign Gold Bonds (SGBs). Many banks also use these rates to set their interest rates for gold loans, which further enhances their relevance in the financial sector.
Important Considerations When Buying Gold
When purchasing gold, consumers should keep a few crucial points in mind to avoid fraud and ensure they receive pure gold. Firstly, always buy certified gold with a Bureau of Indian Standards (BIS) hallmark. The hallmark includes an alphanumeric number (e. g. , AZ4524), which provides information about the gold's purity and caratage. Secondly, cross-check the correct weight of the gold and its price on the day. Of purchase from several reliable sources, such as the India Bullion and Jewellers Association website. Also, be aware that gold prices vary based on 24-carat, 22-carat, and 18-carat purity, so choose the appropriate caratage according to your needs, while adhering to these precautions can ensure a secure and beneficial purchase.
