Gold prices in India experienced a decline on Wednesday, reversing the gains seen over the past two days. The drop was primarily attributed to a fall in global gold rates and profit-taking by investors, with markets adopting a cautious stance ahead of the U.S. Federal Reserve’s upcoming policy announcement and escalating geopolitical tensions in South Asia.
In early morning trading, the price of 24-carat gold was ₹96,950 per 10 grams, marking a decrease of ₹880 from the previous close. Meanwhile, 22-carat gold was priced at ₹88,871 per 10 grams, according to local jewelers.
Global Gold Price Trends
On the international front, spot gold fell 1.3% to $3,383.88 per ounce, following a nearly 3% surge in the previous session. U.S. gold futures also saw a decline, dropping 1% to $3,391.80 per ounce.
Analysts attribute the pullback in gold prices to a “risk-on” market sentiment and a stronger U.S. dollar, both of which reduce the appeal of gold as a safe-haven asset.
Key Drivers Behind the Decline
U.S. Federal Reserve Policy Meeting
Investors are closely monitoring the Federal Reserve’s policy decision, with expectations that interest rates will remain unchanged. However, markets are keen to hear any signals from Fed Chair Jerome Powell regarding potential future rate cuts. Historically, lower interest rates tend to support gold prices as the precious metal does not generate interest or dividends.
Stronger U.S. Dollar
The U.S. dollar index strengthened, making gold more expensive for buyers holding other currencies. This added pressure to the yellow metal’s prices, further contributing to the decline.
Geopolitical Tensions in South Asia
Gold’s traditional role as a safe-haven asset has been overshadowed by rising geopolitical tensions in South Asia. India recently launched retaliatory airstrikes on Pakistan following a deadly terrorist attack in Kashmir two weeks ago. Pakistan has reported multiple casualties and vowed to respond, heightening concerns about regional instability. While such tensions typically drive demand for gold, the current market sentiment, marked by profit-taking and anticipation of the Fed’s policy announcement, has tempered the usual safe-haven buying.
As global and local factors continue to influence gold prices, investors are likely to stay on edge, closely monitoring developments in both the U.S. and South Asia.
