Gold drops by Rs 603; silver corrects too, outlook remains positive ahead

Gold prices corrected on Thursday by Rs 603 per 10 gm at the retail end as the yellow metal edged lower after the US Federal Reserve kept interest rates unchanged. The yellow metal was trading at Rs 98414 per 10 gm as compared to Rs 99,017 per 10 gm on Wednesday.

“Gold prices edged lower after the US Federal Reserve kept interest rates unchanged, as widely anticipated. Also, the likelihood of a rate cut in September has decreased, weighing negatively on bullion. Despite this, gold may continue to attract buying interest at lower levels, supported by strong domestic demand ahead of the festive season and ongoing purchases by global central banks. In the near term, key triggers for gold include the US personal consumption expenditure data due later today, the upcoming jobs report tomorrow, and the imposition of tariffs from the month of August,” said Aksha Kamboj, Vice President of India Bullion & Jewellers Association.

Silver prices too corrected on Thursday along with the gold price. Even though silver is witnessing a correction in prices after achieving , the mutual funds say that it makes a good case for exposure to silver currently from a two to three years perspective.

“In our opinion, it makes a good case for exposure to silver currently from a 2 to 3 years perspective. Silver may rally further to catch up pace with gold as Gold/Silver ratio is still favorable, while silver is looking undervalued,” a report issued by Tata Mutual Fund said.

Silver is witnessing increased demand as an industrial metal in solar and renewables. The recent surge in the prices was majorly attributed to safe haven demand for silver as well along with gold and improved Chinese data. The broad global economic recovery especially from China may boost investment and industrial demand for silver.
Internationally, silver prices have rallied to $38/oz (up ~25% YTD) driven by a surge in investment demand.