Gold and silver prices in India continued their decline in domestic markets in line with global rates which softened amid rising US bond yields. Gold futures on Multi Commodity Exchange (MCX), fell 0.2% to ₹46,145 per 10 gram, to near the lowest level in eight months, and silver futures fell 1% to ₹68,479.
Gold prices in India are down about 8% or 4,000 per 10 gram so far this year after witnessing a huge rally in 2020, which pushed rates to record highs of ₹56,200 in August.
Globally, gold prices fell to their lowest in more than seven months on Friday, on course for their worst week since the end of November, as rising US Treasury yields eroded the non-yielding bullion’s appeal.
Spot gold fell 0.4% to $1,769.03 per ounce by 0250 GMT, having touched its lowest since July 2 at $1,759.29 earlier in the session, Reuters reported. Gold prices have declined 3% so far this week.
US gold futures slipped 0.6% to $1,765.30. “US bond yields have been rallying quite strongly in the last week, and there’s growing momentum that they can lift further as US and global growth recovers more quickly as vaccines roll out,” Lachlan Shaw, National Australia Bank’s head of commodity research, was quoted as saying by Reuters.
Benchmark US Treasury yields hovered close to a near one-year high hit earlier in the week. Higher yields increase the opportunity cost of holding bullion, which pays no interest. Gold’s decline came despite an unexpected rise in US jobless claims last week. “The bond market is looking forward to where the U.S. economy might be as we move through the year as vaccines ease the weight of the pandemic on economic activity, and with plenty of stimulus and support from U.S. Federal Reserve,” Shaw said.
Shaw said that the recent record surge in Bitcoin has also “been competing with gold so far as speculation, a store of wealth and portfolio diversifier,” adding that a continued rally in Bitcoin will be a headwind for gold.
Silver eased 1.1% to $26.71 an ounce, after falling over 2.5% so far this week, its worst since mid-January. Platinum slipped 2.4% to $1,244.19, while palladium shed 0.7% to $2,334.58.
(With Reuters inputs)