Prices for gold and silver witnessed a decline in the domestic futures market during Thursday morning trading on December 18. The drop is attributed to investors booking profits after the precious metals recently scaled record high levels. A mild strengthening of the US dollar also exerted pressure, as traders adopted a cautious stance ahead of the release of key US Consumer Price Index (CPI) inflation data.
Market Snapshot: Key Levels for Precious Metals
On the Multi Commodity Exchange (MCX), the most active contracts for both metals were trading lower. MCX gold February futures were down by 0.20%, quoted at ₹1,34,619 per 10 grams around 9:20 am. Similarly, MCX silver March futures saw a larger decline of 0.47%, trading at ₹2,06,451 per kilogram at the same time.
Drivers Behind the Downturn
The primary factor behind the price correction is profit booking. After a sustained rally that pushed gold and silver to unprecedented highs, some investors chose to lock in gains. This selling activity naturally led to a dip in prices. Concurrently, the US dollar index, which often moves inversely to bullion, experienced a slight uptick. A stronger dollar makes gold more expensive for holders of other currencies, dampening demand.
Market participants are also in a wait-and-watch mode. The imminent release of the US CPI inflation figures has created uncertainty. This data is a critical gauge for the Federal Reserve's future interest rate decisions. Higher-than-expected inflation could prompt the Fed to maintain a hawkish stance, which is typically negative for non-yielding assets like gold.
Implications for Indian Investors
The movement highlights the sensitivity of domestic bullion markets to global macroeconomic cues and currency fluctuations. While the long-term outlook for gold remains supported by geopolitical tensions and central bank buying, short-term volatility is expected to continue. Investors are advised to monitor the US inflation data outcome and the subsequent dollar movement closely, as these will set the near-term direction for prices.
This remains a developing story. Please check back for further updates and detailed analysis.
