Intra-day trading on Wednesday saw shares of gold jewellery-related firms facing downward pressure due to apprehensions of reduced demand, driven by Gold futures reaching unprecedented levels in the international market.
Gold April futures reached a fresh all-time high of $2,150.20 per ounce on Tuesday, surpassing the previous peak of $2,130 recorded in December 2023. In the Indian context, MCX Gold April futures were hovering around Rs 65,000 levels, compared to the initial series levels of Rs 61,200.
On Dalal Street, PC Jeweller and Palm Jewels witnessed a 5% lower circuit lock. PC Jeweller closed at Rs 59.15 with around 2.72 lakh shares traded and pending sell orders for 1.87 lakh shares on the BSE. Palm Jewels hit the lower limit at Rs 19.91. Goldiam International experienced a 4% decline at Rs 184, while Kalyan Jewellers, Tribhovandas Bhimji Zaveri (TBZ), and RBZ Jewellers saw declines ranging from 2-3%. Titan was down by 0.5%.
The surge in gold prices in the international market in recent days, reaching record highs, has been attributed to expectations of a US Federal Reserve interest rate cut. The probability of a rate cut in June increased to 55% on Tuesday, following mixed economic data. Despite a slowdown in the US services industry growth in February, new orders reached a six-month high amid persistently high interest rates.
Experts anticipate heightened volatility in the gold market in the near term, with a focus on the upcoming US Fed chair’s testimony and the monthly jobs report for cues on the potential timing of a rate cut.
Praveen Singh, AVP, Fundamental Currencies and Commodities Analyst at Sharekhan by BNP Paribas, noted, “Helped by continued strong buying momentum on the expectations of a Fed pivot in June, spot gold hit a fresh record high on Tuesday.” The metal’s fifth consecutive gain was supported by a risk-off mood in wider markets, with US Treasuries rallying and the ten-year US yields falling over 1.50% to settle at 4.15%. The US Dollar Index was marginally lower, Singh added.
Additionally, the World Gold Council report highlighted a 5% decline in global gold demand to 4,448.4 tonnes in 2023 compared to the previous year, mainly attributed to continuing Exchange-Traded Fund (ETF) outflows.
