Gold Prices Correct Amid Global Signals Conflict

The Indian gold market is experiencing an unusual mix of record high prices and conflicting global signals. Prithviraj Kothari, Managing Director at RiddiSiddhi Bullions and President of India Bullion and Jewellers Association, explains that the domestic dip in gold prices can be attributed to the US Federal Reserve's decision to raise interest rates by 25 basis points, its first hike in three years. This has made non-yielding gold less attractive.

Kothari also notes that MCX gold reacted before international prices had fully recovered their losses, triggering some profit booking and causing buyers to hold off on purchases in anticipation of a further pullback ahead of the festive season.

The near-term trend for gold will largely depend on the US Federal Reserve's next steps, particularly whether it goes for another rate hike. The movement of the US dollar and bond yields will also remain important, as both generally have an inverse relationship with gold.