Gold Prices Fall on MCX Amid Weaker Spot Demand and Higher Crude Costs

Gold and silver prices fell on the Multi Commodity Exchange (MCX) due to weaker spot demand, selling by participants, and a less supportive global macro environment. The October gold futures contract dropped ₹530 or 0.35% to ₹1.50 lakh per 10 grams, while December silver futures declined ₹1,411 or 0.61% to ₹2.31 lakh per kg.

The decline comes as the US dollar and US Treasury yields remain firm, increasing volatility in precious metals. According to Vedika Narvekar of Anand Rathi Share and Stock Brokers, gold is under 'fresh pressure', with spot prices down 0.77% at around $4,266 an ounce.

The recent weakness in gold is attributed to two factors: higher crude prices following attacks on Saudi energy infrastructure and a rise in US Treasury yields. Narvekar noted that higher oil prices are adding to inflation concerns, making non-yielding gold relatively less attractive with the 10-year US Treasury yield at around 5%.

Experts remain cautious about chasing the recent price moves, advising investors to avoid buying solely on short-term price movements and instead consider staggered buying for long-term allocations. The longer-term case for gold remains linked to diversification and its safe-haven role, with a diversified portfolio comprising 70% equity, 15% debt, and 15% gold delivering an average seven-year rolling return of 15% since 2000.