Gold snaps 8-day rally; drops Rs 1,000 to Rs 1.06 lakh/10 g on profit booking

New Delhi, Sep 4 (PTI) Gold prices eased from record high and dropped Rs 1,000 to Rs 1,06,070 per 10 grams, ending the eight-day rally in the national capital on Thursday, as traders booked profits in tandem with a weak trend in global markets.

The precious metal of 99.9 per cent purity had settled at Rs 1,07,070 per 10 grams, its all-time high level on Wednesday.

Gold of 99.5 per cent purity also witnessed a pullback, depreciating Rs 1,000 to Rs 1,05,200 per 10 grams (inclusive of all taxes) on Thursday. It had closed at Rs 1,06,200 per 10 grams in the previous market session, according to the All India Sarafa Association.

Silver too slipped from its record levels as investors booked profits at higher levels. The white metal fell Rs 500 to Rs 1,25,600 per kilogram (inclusive of all taxes) on Thursday.

In the previous session, it had ended at its lifetime high of Rs 1,26,100 per kg.

Snapping an 11-day rising streak, gold futures for October delivery plunged Rs 1,395 or 1.3 per cent to hit a low of Rs 1,05,800 per 10 grams in the intraday trade on the Multi Commodity Exchange (MCX). It was trading at Rs 1,06,505 per 10 grams, down by Rs 690 or 0.64 per cent.

The December contracts for gold futures also trimmed early losses to trade at Rs 1,07,524 per 10 grams, lower by Rs 711 or 0.66 per cent.

Silver futures for December delivery extended the losses for second straight session and plunged Rs 1,356 or 1.08 per cent to Rs 1,24,516 per kilogram.

The white metal futures for March next year delivery tanked Rs 1,364 or 1.07 per cent to trade at Rs 1,25,888 per 10 kg on the MCX.

"Gold prices declined on Thursday as traders took profits after a rally for nearly two weeks. The prices have entered overbought territory on both daily and weekly time frames, suggesting that a correction is anticipated," said Saumil Gandhi, Senior Analyst - Commodities at HDFC Securities.

Meanwhile, the growing acceptance that the US central bank will lower borrowing costs later this month and deliver at least two 25-basis-point rate cuts by the end of this year acted as a headwind for the US dollar.

Further, trade uncertainties aided the precious metal prices.

In the overseas market, spot gold prices and gold futures also corrected after scaling historic highs.

The precious metal dropped USD 39.61, or 1.10 per cent, to USD 3,539.14 per ounce. It had touched an all-time high of USD 3,578.80 per ounce on Wednesday.

Additionally, Comex gold futures for December delivery dipped nearly 1 per cent to trade at USD 3,604.40 per ounce after hitting a record high of USD 3,640.10 per ounce in the previous session.

"Gold prices fell over 1 per cent on profit-taking, following the recent surge. However, prices have since recovered to around USD 3,540 per ounce, ahead of key US macroeconomic data releases, including private payrolls and weekly jobless claims.

"The US jobs report due on Friday is expected to show a fourth straight month of subdued payroll growth. If the data come in weaker than anticipated, it may boost the case for deeper interest rate cuts by the US Federal Reserve in the coming months," Kaynat Chainwala, AVP Commodity Research, Kotak Securities, said.

Spot silver was trading 0.70 per cent lower at USD 40.93 per ounce.

Despite Thursday's decline, commodities market experts noted that bullion prices continue to trade at elevated levels amid geopolitical tensions, expectations of interest rate cuts by the US Federal Reserve, and festive demand prospects in India.

"Gold and silver continued to be supported by these additional uncertainties, which also included anxieties about debt and the independence of the Federal Reserve," Renisha Chainani, Head - Research at Augmont, said.

On the market outlook, "Gold will maintain its positive momentum and remains on track to achieve higher levels of more than USD 3,700 per ounce and is likely to also pull silver along to our levels of USD 48 per ounce," Sandip Raichura - CEO of Retail Broking and Distribution & Director, PL Capital, said.

Raichura further said: "The recent geopolitical events, the court challenge on tariffs and the summit in China have thrown a large spanner in the works for the dollar and therefore the uncertainty led buying would continue to propel the metal higher." The movement in US dollar holds the key in the near term to gold levels but in the medium term investors remain very bullish as de-dollarisation and Reserve Bank buying ETF continues unabated, he added. PTI HG BAL HVA