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Gold Loses Shine: Here’s Why Prices Are Falling Across India and Global Markets

Gold, traditionally considered one of the safest investment options, is witnessing a sharp decline once again. On Monday, gold prices dropped below ₹1.25 lakh per 10 grams in Mumbai, with 24-carat gold trading at ₹1,24,480 and 22-carat gold at ₹1,15,140. Silver too joined the downtrend, slipping to ₹1,54,900 per kilogram.

In the last ten days, both gold and silver prices have seen a significant drop, surprising investors ahead of the festive season. Let’s look at the five key reasons behind this sudden fall.

1. Global Gold Prices Have Dropped Sharply

The decline isn’t limited to Indian markets — global gold prices have also fallen. In the international market, spot gold slipped 1.3% to $4,059.22 per ounce, while December gold futures in the U.S. dropped 1.6% to $4,072.40.

These rates are nearly 5% lower than the record high of $4,381.21 per ounce seen on October 20, when gold had rallied due to geopolitical tensions and expectations of a U.S. interest rate cut. As those concerns eased, investors began pulling back from gold, triggering a correction.

2. Improved U.S.-China Trade Relations

One of the biggest reasons for the fall in gold prices is the positive sentiment surrounding U.S.-China trade talks. The improving relationship between the two largest economies has boosted global market confidence.

Asian stock markets have surged as investors expect a potential trade agreement soon. U.S. President Donald Trump’s statement about his “positive discussion” with Chinese President Xi Jinping further strengthened optimism. When global tensions ease, the demand for gold as a safe-haven asset naturally declines.

3. Weak Safe-Haven Demand and a Stronger Dollar

According to Darshan Desai, CEO of Aspect Bullion & Refinery, gold’s traditional image as a “safe-haven” investment is losing appeal. Investors are moving towards riskier assets like equities, which offer higher short-term returns amid stable market conditions.

At the same time, the U.S. dollar has strengthened, making gold — which is dollar-denominated — more expensive for holders of other currencies. This has reduced international demand, further pressuring prices.

Desai also noted that the week could bring high volatility in the gold market due to major events, including the U.S. Federal Reserve meeting, trade negotiations, and earnings reports from top tech companies.

4. Focus on Federal Reserve’s Next Move

All eyes are now on the U.S. Federal Reserve’s policy meeting. Markets are expecting a 0.25% interest rate cut, but the real focus will be on Fed Chair Jerome Powell’s statement, which could signal the direction of future monetary policy.

Analysts at UBS, including Giovanni Staunovo, believe that while trade progress has put short-term pressure on gold, expected rate cuts could support prices in the medium term. Typically, lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive to investors.

5. What Lies Ahead for Gold Investors?

Gold traditionally performs well in periods of economic uncertainty or low interest rates, as investors seek stable stores of value. However, when stock markets are rallying, gold tends to lose its shine.

Currently, traders are closely watching whether the Fed will continue with rate cuts in the coming months. If global growth concerns resurface or inflation rises, gold could regain momentum. On the other hand, if the global economy remains steady and equities continue to outperform, gold may stay under pressure.

Bottom Line: A Temporary Dip or a Trend Shift?

While the recent correction in gold prices may seem alarming, experts suggest that it could be a temporary phase rather than a long-term decline. For Indian investors, this dip might actually offer a buying opportunity, especially ahead of the festive and wedding seasons when gold demand typically surges.

Still, it’s important to stay cautious and track global economic trends, central bank policies, and currency movements, as all three directly influence gold’s performance.