Gold fell by Rs 3400 due to US-China trade agreement, price at Rs 96550 per 10 grams

Traders shifted away from safe-haven investments following the US news of deferment of duty on Chinese imports by 90 days and the gold price in the capital on Monday plummeted by a whopping Rs 3,400 to Rs 96,550 per 10 grams.

As per the All India Sarafa Association, the gold of 99.5 fineness dipped by Rs 3,400 to Rs 96,100 per 10 grams on Monday. This is the largest drop in the past 10 months following the price of gold dipped by Rs 3,350 on July 23, 2024.

On Saturday, the price of gold of 99.9 and 99.5 percent purity closed at Rs 99,950 and Rs 99,500 per 10 grams. Rahul Kalantri, Vice President (Commodity), Mehta Equities Limited, said, "Gold prices fell sharply amid signs of progress in trade talks between the US and China and some relief in geopolitical tensions, including India-Pakistan."

Apart from this, the price of silver also fell by Rs 200 to Rs 99,700 per kg, while on Saturday the price of silver closed at Rs 99,900 per kg. Following trade talks in Geneva over the weekend, the US agreed to reduce its 145% tariff rate on Chinese goods to 30%, while China agreed to reduce its rate on US goods to 10% for a period of 90 days.

Meanwhile, the dollar index, which measures the dollar's strength against a basket of six currencies, traded 1.42% higher at 101.76. In futures trading, the most-traded gold contract on the Multi Commodity Exchange (MCX) fell Rs 3,932 or 4.07% to Rs 92,586 per 10 grams.

According to Jatin Trivedi, Vice President Research Analyst - Commodity & Currency, LKP Securities, geopolitical tensions have eased with signs of a possible ceasefire between Russia and Ukraine and India and Pakistan agreeing on military actions.

Trivedi said these developments led to massive profit booking in gold, which had earlier climbed due to global uncertainty. The strong rally in stock markets also affected gold's appeal as a safe investment.

The price of the silver contract for July delivery on MCX fell by Rs 2,295 or 2.37% to Rs 94,434 per kg. Spot gold fell more than 3% to $ 3,218.70 an ounce in global markets. Spot silver fell 1.19% to $ 32.33 an ounce in the international market.

Pranav Mer, Vice President, EBG (Commodity & Currency Research), JM Financial Services Ltd, said, "Gold has fallen by more than 2% due to long-term liquidation/profit booking amid easing of geopolitical tensions and improvement in the dollar against major currencies."

At the end of the week, investors will focus on US macroeconomic data, including inflation/retail sales and consumer sentiment. They will also await US Fed Chair Jerome Powell's speech for more clues about the path of the central bank's interest rate, Meir said.