Precious metals dealt investors another blow on Tuesday, June 24, as both gold and silver weakened for the second consecutive session. At 9:40 am on MCX, gold was trading 2,234 rupees lower at 144,295 rupees per 10 grams. Silver lost even more of its shine, sliding 3,407 rupees to settle at 222,427 rupees per kilogram.
Overseas markets told the same story. On COMEX, gold dropped 1.59% to 4,081 dollars an ounce, while silver fell 1.55% to trade at 61.110 dollars an ounce.
Other Precious Metals Slip Too
The slide was not limited to gold and silver. Platinum eased 0.9% to 1,637.34 dollars an ounce, and palladium dropped 1.2% to reach 1,223.29 dollars an ounce.
Gold Rates Across Indian Cities
In Chennai's bullion market, 24-carat gold was selling at 14,792 rupees per gram, 22-carat at 13,559 rupees per gram and 18-carat at 11,339 rupees per gram. In the capital Delhi, 24-carat gold stood at 14,474 rupees per gram, 22-carat at 13,269 rupees and 18-carat at 10,859 rupees per gram.
Prices were almost identical in Mumbai, Kolkata, Bengaluru and Hyderabad. Across these four cities, 24-carat gold was priced at 14,459 rupees per gram, 22-carat at 13,254 rupees per gram and 18-carat at 10,844 rupees per gram.
Why Gold Keeps Falling
The biggest reasons behind the drop are strong economic data coming out of the United States and shifting expectations about Federal Reserve policy. August-delivery gold futures fell 1.6% on Tuesday to 4,135 dollars per troy ounce. Globally, gold prices have tumbled by roughly 10% over the past month. Add to that signs of softening demand in Asian markets, and the pressure on gold, long seen as a safe-haven investment, has only intensified.
Deutsche Bank Slashes Its Forecast
Germany's major lender Deutsche Bank has cut its earlier gold price forecast by more than 20%. The bank believes that if the market grows more convinced the US Federal Reserve will raise interest rates three to four times, gold could fall to 3,800 dollars an ounce. Changing expectations around the MPC have tilted the balance of risk for gold to the downside.
Deutsche Bank analyst Michael Hsueh said that under the bank's base case, if the Federal Reserve leaves interest rates unchanged for an extended period, gold could hold around 4,800 dollars an ounce in the fourth quarter of this year. However, if the market starts pricing in multiple rate hikes in the months ahead, the pressure on gold will build and prices could slip to 3,800 dollars an ounce.
