Good time to buy gold: Price plummets by Rs 1,840 per sovereign

THIRUVANANTHAPURAM: Gold prices in Kerala plummeted as rising global crude oil prices reignited inflation fears, fueling expectations that the US Federal Reserve will maintain higher interest rates for longer. The price of 22-carat gold in Kerala fell by Rs 230 per gram, bringing down the price of a sovereign by Rs 1,840. A sovereign of gold now costs Rs 1,10,120. On Saturday, one gram of gold was trading at Rs 13,995.

At 9.35 am IST, spot gold prices fell 2.1% to $4,198.10 an ounce, marking the biggest single-day decline since September 1. US gold futures also fell 2.1% to $4,231 an ounce. Oil prices had risen by more than 1% after US President Donald Trump rejected an Iranian proposal to reopen the Strait of Hormuz.

Brent crude rose nearly 2% to $106.50 a barrel. The rise in oil prices has renewed concerns over inflation and could make it more difficult for the Federal Reserve to ease monetary policy. Earlier this month, the Fed raised its policy rate by 25 basis points to a range of 3.75% to 4%. Higher interest rates generally weigh on gold as the non-yielding asset becomes less attractive compared with interest-bearing investments.

Stock market falls

The rise in oil prices amid a deadlock in US-Iran peace talks is also weighing on the stock market. The Sensex and Nifty recorded their longest weekly losing streak since 2020. Indian benchmark indices opened lower on Monday as investors remained cautious.

The BSE Sensex fell 659.65 points, or 0.89%, to 73,236.09 at 9.20 am. The Nifty 50 declined 217.50 points, or 0.94%, to 22,923. Fourteen of the 16 major sectoral indices were trading lower, while the small-cap and mid-cap indices fell around 0.2% each. Other precious metals also declined. Silver fell 2.6% to $62.64 an ounce, while platinum dropped 2.1% to $1,741.45 and palladium declined 2.1% to $1,239.95.