Since the Union Budget was presented by Finance Minister Nirmala Sitharaman, Gold prices fell for the fourth day in a row on Thursday, after the government slashed the customs duty on the metal in the Budget. Gold futures on Multi Commodity Exchange (MCX) slumped by Rs 2,000 per 10 grams in four days to Rs 47,400. Silver prices also fell by more than Rs 6,500 since the Budget to Rs 67,840 per kilogram.
On MCX, gold futures skidded 1% to Rs 47,310 per 10 gram, extending losses to the fourth day. In four days, gold has lost nearly Rs 2000 per 10 gram amid a slide in global rates and import duty cut announced in Budget 2021. Silver futures on MCX on Thursday declined 1% to Rs 67,848 per kg.
Analysts say that the slide in gold rates and a recovering economy could give a boost to physical gold demand in India. Gold rates had hit a record high of Rs 56,200 in August.
Year 2020 was by far the worst year for gold in the last 25 years. Demand for gold in India had dropped to 446 tonnes as compared to 690.4 tonnes in 2019, as per the latest report released by World Gold Council (WGC). However, by the December quarter the demand had recovered to previous year's levels.
For silver, which has seen massive volatility in prices in the recent days due to massive buying and selling by retail traders, analysts believe Rs 65,000 makes a good base. This means prices may fall by Rs 3,000 from current levels.
In global markets, gold rates edged lower amid a jump in US bond yields and a stronger dollar. Spot gold eased 0.1% to 1,832.84 dollar per ounce. The dollar index edged higher to 91.198, making precious metals expensive for holders of other currencies. US benchmark 10-year Treasury yield rose to its highest in over three weeks. Higher yields increase the opportunity cost of holding non-yielding assets like gold.
