Gold declines 1% in spot market as equity market sentiment turns weak

Reports say retail consumers are selling their gold globally to make ends meet as they've remained jobless for months now due to economic slowdown caused by the Covid-19 pandemic

The price of gold declined 1 per cent  on Monday, following the global movement, over poor retail consumer demand and weak equity market sentiment.

Standard gold in the city's popular Zaveri Bazaar fell by Rs 464 to trade at Rs 46,859 per 10 gram on Monday, as against Rs 47,323 on last Friday. The yellow metal for delivery in August on the Multi Commodity Exchange of India (MCX) declined 1.4 per cent to trade at Rs 46,676 per 10 grams in the early evening session on Monday.

“The gold and silver prices have gone up, along with other risk-aversion asset classes, in recent months. There are reports of retail consumers selling gold globally amid rising joblessness due to the economic downturn caused by the Covid-19 pandemic. The decline in price today (on Monday) is just a knee-jerk reaction of a decline in the equity markets,” said Gnanasekar Thiagarajan, director, Commtrendz.

The gold price has run up quite a bit, with over 25 per cent returns in less than one year due to the global economic slowdown, the ongoing trade war between the US and China, and the tensions in Hong Kong and West Asia.

 

 

“Institutions continue to remain bullish towards gold. Hence, the rally in gold would continue even with intermittent volatility,” said Naveen Mathur, director, Anand Rathi Shares and Stockbrokers.

In global markets, gold prices declined after a strong rally last week. In the London spot market, gold fell 0.7 per cent to trade at $1,718.13 per ounce after gaining 2.5 per cent last week.

Indicating a strong consumer connect, gold reserves with SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), rose 0.1 per cent to 1136.22 tonnes on Friday. In line with gold, silver declined 2 per cent on Monday. Global equity markets reported a decline on Monday.

Meanwhile, consumers remained apprehensive of buying new gold ornaments amid uncertainty in the global economy.

“There is absolutely no sales. Consumers are afraid of coming out of homes due to the fear of coronavirus infection,” said Kumar Jain, director, Umedmal Tilokchand Zaveri, a bullion dealer and jewellery retailer in Zaveri Bazaar.