Gold prices continue to fall in Kerala, down ₹5,520 per sovereign in two days

Gold prices continued their downward trend in Kerala on Thursday, offering relief to buyers after a prolonged rally that had pushed the precious metal to record highs.

The price of gold fell by ₹1,560 per sovereign to ₹1,06,800 on Thursday, according to the All Kerala Gold and Silver Merchants Association (AKGSMA). The decline follows a sharp drop of ₹3,960 per sovereign on Wednesday, taking the total fall over the past two days to ₹5,520 per sovereign.

The price of one gram of gold also declined by ₹195 to ₹13,350.

The correction comes amid a decline in international gold prices in recent days. The fall is due to growing expectations that the US Federal Reserve could maintain higher interest rates for longer, amid concerns that the escalating conflict between the United States and Iran could fuel global inflationary pressures.

Since the outbreak of hostilities in the Middle East, both oil and gold prices have surged as investors sought safe-haven assets amid geopolitical uncertainty. However, rising oil prices have also heightened fears of inflation, prompting speculation that the Federal Reserve may delay interest rate cuts. Higher interest rates typically reduce the appeal of non-yielding assets such as gold.

Despite the recent decline, international gold prices edged higher in early trade on Thursday, limiting the extent of the fall in Kerala. According to Reuters, spot gold rose 0.5 per cent to $4,095.64 an ounce in early trading on Thursday.

Meanwhile, the price of 18-carat gold in Kerala fell by ₹160 to ₹11,030 per gram. Silver prices remained unchanged at ₹250 per gram, according to AKGSMA.