Gold Prices See Significant Drop on MCX ,Profit Booking and Easing Tensions Cited:

Gold prices on the Multi Commodity Exchange (MCX) experienced a substantial decline of approximately 6%, following a period of record highs. This significant drop is attributed to a combination of factors, including profit-booking by investors and easing concerns over U.S.-China trade tensions. Silver prices also saw a notable fall, dropping by over 4%.

The decline comes after a period of strong gains for precious metals, fueled by geopolitical uncertainties, central bank demand, and expectations of interest rate cuts by major economies. In the international market, gold prices retreated after reaching all-time highs earlier in the week. Similarly, domestic gold futures on the MCX, particularly for December 2025 contracts, have shown a sharp downward movement.

Key Factors Influencing the Price Drop:

Profit Booking: After months of continuous gains that pushed gold to record levels, traders are seen cashing in on their profits. The easing of U.S.-China trade tensions has removed some of the "fear premium" that was supporting prices.
Global Market Weakness: International gold prices have seen a significant slump, with some reports indicating the steepest intraday drop in over a decade for gold and a substantial fall for silver.
Stronger Dollar Trends: While not the primary driver, a strengthening dollar can sometimes put downward pressure on gold prices, making them more expensive for holders of other currencies.
Festival Season Impact: While the festive season, particularly Dhanteras and Diwali, usually boosts physical demand for gold in India, the immediate post-festival period often sees profit-taking activity as traders lock in gains.

MCX Gold and Silver Performance:

On MCX, December gold futures reportedly opened at ₹1,20,600 per 10 grams on Wednesday, October 22, marking a decrease of over ₹7,000, or approximately 6%. Silver futures also tanked significantly, trading at around ₹1,43,900 per kilogram, down by about 4.2%. It's important to note that the MCX remained closed during the morning session on this date due to Diwali Balipratipada, with trading resuming in the evening.

Investor Outlook:

While the current dip presents an opportunity for investors looking to buy gold at lower prices, experts advise caution. The short-term outlook might remain volatile, with attention on upcoming economic data, such as U.S. inflation figures, which could influence future interest rate decisions by central banks.

Despite the recent correction, many analysts believe that the underlying factors supporting gold, such as global economic uncertainties and central bank purchases, remain intact. This suggests that gold may continue to be a valuable asset in investment portfolios for the medium to long term. Investors are advised to brace for potential fluctuations and to consider strategies like staggered buying or implementing strict stop-loss orders.