Gold and Silver Prices Fall Sharply as US-China Trade Optimism Strengthens Dollar

Gold futures for December delivery recorded a significant drop of Rs 1,546 per 10 grams on Monday as global markets reacted to positive developments in US-China trade relations.

New Delhi:

Gold and silver prices experienced sharp declines in futures trading on Monday, reflecting weakness in global bullion markets. The primary factors driving this downward trend include increasing optimism surrounding potential US-China trade agreements and a strengthening dollar, which reduced demand for precious metals as safe-haven assets.

On the Multi Commodity Exchange (MCX), gold futures for December delivery fell by Rs 1,546, representing a 1.25 percent decrease to Rs 1,21,905 per 10 grams, with a business turnover of 12,428 lots. During the holiday-shortened week, the yellow metal recorded a total loss of Rs 3,557, or 2.80 percent.

Darshan Desai, CEO of Aspect Bullion & Refinery, explained, "Gold prices continue to decline as safe-haven demand weakens amid optimism over a potential US-China trade deal and a stronger US dollar."

The dollar index, which measures the greenback's strength against a basket of six major currencies, showed a marginal increase of 0.03 percent to reach 98.98.

Silver futures also suffered substantial losses on the MCX platform. The white metal's December delivery contracts decreased by Rs 1,964, or 1.33 percent, to Rs 1,45,506 per kilogram with a business turnover of 20,367 lots. Over the past week, silver had already declined by Rs 9,134, representing a 5.83 percent drop.

In international markets, Comex gold futures for December delivery declined by USD 61.69, or 1.49 percent, trading at USD 4,076.11 per ounce on Monday.

Jigar Trivedi, Senior Research Analyst at Reliance Securities, noted, "Gold prices fell to around USD 4,070 per ounce on Monday, extending Friday's decline, as progress in US-China trade talks dampened demand for safe-haven assets."

Following two days of discussions in Malaysia, leading negotiators from Washington and Beijing achieved a preliminary consensus on several key issues, including export controls, fentanyl trafficking, agricultural trade, and shipping levies.

Trivedi added that these talks have established groundwork for US President Donald Trump and Chinese President Xi Jinping to finalize a trade agreement during their upcoming meeting in South Korea later this week.

Comex silver futures for December delivery were trading 1.44 percent lower at USD 47.88 per ounce.

Darshan Desai of Aspect Bullion & Refinery cautioned that investors using gold as a hedge should prepare for short-term volatility and pronounced price fluctuations. He warned that positive developments regarding the trade deal or additional gains in the US dollar could trigger further profit-taking in gold markets.

Jigar Trivedi of Reliance Securities further noted that traders are closely monitoring major central bank decisions scheduled for this week. The Federal Reserve is widely anticipated to implement a 25 basis point rate cut following softer-than-expected inflation data, while both the European Central Bank and the Bank of Japan are expected to maintain their current policy rates.