Gold Rates Fall Below Rs 1,25,000: Why Are Jewellery Prices Declining? Know Key Factors | Savings and Investments News

A possible trade deal between the US and China is supporting risky assets and weighing on gold.

Gold prices extended their decline on Monday, slipping below the Rs 1.25 lakh mark per 10 grams in Mumbai, tracking a sharp global fall as optimism over easing US-China trade tensions boosted investor appetite for riskier assets such as equities. In the domestic market, 24-carat gold was priced at Rs 1,24,480 per 10 grams, while 22-carat gold traded at Rs 1,15,140 per 10 grams. Silver prices also weakened, quoting at Rs 1,54,900 per kg.

Globally, spot gold fell 1.3% to $4,059.22 an ounce in early trade, while US gold futures for December delivery were down 1.6% at $4,072.40. Prices have now slipped more than 5% from their record high of $4,381.21 touched on October 20, when geopolitical tensions and expectations of US rate cuts had spurred a strong rally.

Asian stock markets rallied on Monday as hopes of a breakthrough in US-China trade talks improved risk sentiment, reducing the appeal of safe-haven assets such as gold. The rebound came after US President Donald Trump said the two nations were likely to come away with a trade deal following a high-level framework discussion ahead of his meeting with Chinese President Xi Jinping in South Korea later this week.

Volatility Likely Amid Trade Talks and Fed Decision

“Gold prices continue to decline as safe-haven demand weakens amid optimism over a potential US-China trade deal and a stronger US dollar,” said Darshan Desai, CEO, Aspect Bullion & Refinery.

“This week is a crucial one for the bullion market, with key events including meetings between US President Donald Trump and Chinese President Xi Jinping, a US Federal Reserve announcement, and several major tech earnings. Investors should be prepared for short-term volatility and sharp price swings,” he added.

Desai added that positive updates on trade negotiations or a firmer US dollar could trigger further profit-taking in gold, especially if the Federal Reserve signals fewer rate cuts than expected in its policy meeting on Wednesday.

Fed Policy In Focus: What Markets Expect

Analysts said a 25-basis-point Fed rate cut is already priced in by markets, leaving traders focused on the tone of Chair Jerome Powell’s statement for clues about future policy direction.

According to Reuters, UBS analyst Giovanni Staunovo said that while optimism over trade talks is weighing on gold, the possibility of continued monetary easing remains a supportive factor in the medium term.

“A possible trade deal between the US and China is supporting risky assets and weighing on gold, but we should also remember that potentially lower tariffs will allow the Federal Reserve to cut rates further,” he said.

Gold May Regain Shine if Rate Cuts Continue

Gold, which offers no yield, typically benefits in a low-interest-rate environment as investors seek refuge in assets that preserve value. However, with risk appetite returning to global equities, bullion has lost some of its sheen in recent sessions.