New Delhi, May 12 — Gold prices in the national capital witnessed a sharp decline of ₹3,400 on Monday, settling at ₹96,550 per 10 grams, following a shift in investor sentiment after the United States paused planned tariff hikes on Chinese imports. As per agency report, the drop marked the steepest single-day fall in ten months, with the last comparable slide of ₹3,350 recorded on July 23, 2024.
According to the All India Sarafa Association, gold of 99.5 percent purity closed at ₹96,100 per 10 grams. On Saturday, gold of 99.9 and 99.5 percent purity had closed at ₹99,950 and ₹99,500 per 10 grams respectively.
Traders attributed the sudden drop in prices to improved risk appetite among investors after signs of a thaw in US-China trade relations. Mehta Equities Ltd.'s Vice President for Commodities, Rahul Kalantri, noted that progress in trade negotiations and easing geopolitical tensions, including between India and Pakistan, prompted profit booking in gold.
Silver prices also registered a decline, falling by ₹200 to ₹99,700 per kilogram from Saturday’s close of ₹99,900.
Following weekend trade talks in Geneva, the US agreed to reduce its tariff rate on Chinese goods from 145 percent to 30 percent, while China committed to lowering its tariffs on US goods to 10 percent for a 90-day period. These developments significantly reduced market uncertainty, curbing the demand for gold as a safe-haven asset.
Meanwhile, the US Dollar strengthened against a basket of six major currencies, with the dollar index rising 1.42 percent to 101.76.
Jatin Trivedi, Vice President of Commodities and Currency Research at LKP Securities, cited indications of a possible ceasefire between Russia and Ukraine and the India-Pakistan agreement to halt military operations as further factors reducing geopolitical risk. These signs of de-escalation, combined with bullish equity markets, led to heavy profit-taking in gold, which had earlier rallied on the back of global uncertainty.
In international markets, spot gold declined over three percent to $3,218.70 per ounce, while spot silver dropped by 1.19 percent to $32.33 per ounce.
Pranav Mer, Vice President of EBG – Commodities and Currency Research at JM Financial Services Ltd., stated that investor focus will now shift to upcoming US macroeconomic data, including inflation figures, retail sales, and consumer sentiment indicators. Market participants are also awaiting remarks from Federal Reserve Chairman Jerome Powell for further cues on interest rate policy.
