GOLD PLUNGES RS 5,000/10 GRAM, SILVER TANKS RS 8,700/KG. 3 REASONS FOR YELLOW METAL'S SHARPEST INTRADAY SLIDE

Domestic gold prices plunged nearly Rs 5,000 per 10 gram on Friday to hit the day's low of Rs 1,21,895, witnessing one of its sharpest intraday falls. The yellow metal prices took cues from the international markets where they were down by $127 per troy ounce.

Silver rates saw a sharper decline of Rs 8,700 per kg as the white metal rates hit the day's low Rs 1,53,729. On the COMEX, the silver rate was hovering around $50.21, down 5.56%.

The sudden fall in gold and silver prices was primarily due to two reasons. Here's what happened:

1) Fed rates

Gold and silver prices fell today in the wake of hawkish comments from U.S. Federal Reserve officials which has clouded prospects for a December rate cut. A Fed rate cut acts as a positive trigger for non-yielding gold.

According to CME Group's FedWatch tool, traders now see a 49% probability of a quarter-point rate cut in December, down from 64% earlier this week.

2) End of US shutdown

The ending of the U.S. government's record 43-day shutdown, which had disrupted key economic data flows, dented the safe haven appeal of gold. While the White House has tempered hopes for clarity on the economy, stating that October's unemployment data may not become available, the immediate impact could trigger more cuts in the price of gold and silver.

Anuj Gupta, Director at Ya Wealth Global Research, said that the appeal of gold and silver has come down on account of these two developments. He sees weakness in bullion continuing in the near term.

Both gold and silver have been in top form in 2025 so far, turning out to be the best asset class. Gupta said that domestic gold prices have jumped 60%, or by Rs 45,700 per 10 gram, while silver prices have appreciated by 78%, or Rs 67,700, on a year-to-date basis.

In November, gold prices have gained 1%, or Rs 1,262, while silver has risen by 4.6%, or Rs 6,845 per kg.

3) Strength in dollar index

The dollar index strengthened, adding additional pressure on gold. Prices slipped from this week’s high of Rs 1,27,000 to Rs 1,25,600.

Gold trading strategy

Gupta recommends a sell on rise strategy.

Sell gold at Rs 1,27,000 with a stop loss of Rs 1,31,000 and target of Rs 1,20,000

Sell silver at Rs 1,63,000, with a stop loss of Rs 1,66,000 and a target of Rs 1,55,000.

Meanwhile, Jateen Trivedi, VP Research Analyst - Commodity and Currency, at LKP Securities noted that gold is expected to remain volatile. The range for the yellow metal is likely to remain between Rs 1,24,000– Rs 1,27,500.

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)