Gold retreats from record highs, falls by ₹2,256 in 3 sessions on profit booking

Gold retreats from record highs, falls by ₹2,256 in 3 sessions on profit booking/Mint

Dil Bar Irshad | May 23, 2024 | 07:27 PM IST | Breaking News | Follow on Google News

Gold retreats from record highs, falls by ₹2,256 in 3 sessions on profit booking

Gold retreats from record highs, falls by ₹2,256 in 3 sessions on profit booking

Gold prices have pulled back from their record highs in recent trading sessions, marking a reversal after a strong rally. Over the course of the last three sessions, the price of the yellow metal dropped from ₹74,367 per ten grams to reach a new one-week low of ₹72,111 on the MCX, marking a decline of ₹2,256.

The spot gold price dropped to $2354.95 per ounce in today’s session, marking a three-day slide of $71, or 3%. Since Monday’s all-time high of $2,450, the bullion has undergone a correction of 3.9%.

This downward movement can be attributed to investors engaging in profit booking, particularly after the release of the Federal Reserve meeting minutes, which hinted at a lack of confidence among policymakers regarding the possibility of imminent interest rate cuts.

The Federal Reserve on Wednesday released the minutes of the Federal Open Market Committee meeting that was held on April 30–May 1, 2024. The minutes for each regularly scheduled meeting of the Committee are generally published three weeks after the day of the policy decision.

The minutes showed that while policymakers viewed current policy as “well positioned,” some expressed readiness to tighten policy further if necessary. Additionally, it was noted that achieving greater confidence in inflation reaching the targeted 2% level would take longer than previously expected.

The likelihood of rate reductions in September and November has slightly diminished to approximately 61% and 72%, respectively.

Following the more hawkish tone of the Federal Reserve’s minutes, the US Dollar index, which measures the currency against six major counterparts, surged to a week high in the preceding session, triggering profit booking in gold.

On the other hand, UK inflation came in higher than expected on Wednesday, at 2.3% on an annual basis, which prompted markets to slash the probability of a June rate cut by the Bank of England.

Meanwhile, central banks slowed their gold imports amid surging prices. Media reports showed that China’s bullion imports decreased in April to 136 tons, marking a 30% decline from the previous month and the lowest total for the year.

.Furthermore, India’s gold imports for 2024 are anticipated to drop by nearly a fifth compared to the previous year. Record-high prices have incentivised retail consumers to exchange old jewellery for new items, the head of an industry body told Reuters.

This decrease in imports by India, the world’s second-largest consumer of gold, may act as a limiting factor on a rally that propelled global prices to a record high earlier in the week.

On the other hand, the hawkish minutes also propelled oil prices to trade at levels reminiscent of the second week of March. Furthermore, apprehensions regarding demand and the rising US stockpiles have also added pressure to the prices. According to the latest EIA report, US crude inventories have surged, with Cushing, Oklahoma’s storage hub, hitting its highest level since July.

(Except for the headline, this story has not been edited by VoM News staff and is published from syndicated feed)

Dil Bar Irshad

Dil Bar Irshad is a seasoned journalist, hails from Jammu Kashmir's Doda, covers political, social, business stories, index stories.