Gold suffers sharpest weekly drop since November 2024

Gold prices fell sharply on Friday, 16 May, capping the week with their poorest performance since November 2024. Spot gold declined by 0.8 per cent to $3,213.56 per ounce in early trading, down 3.3 per cent over the week. US gold futures also dipped 0.3 per cent to $3,217.20 an ounce.

In India, gold mirrored the , with prices slipping to Rs 9,513 per gram for 24 karat, Rs 8,720 for 22 karat, and Rs 7,135 for 18 karat gold, according to Goodreturns data. The weekly drop in India was notable, with gold rates falling by several thousand rupees per 10 grams, reflecting the broader global correction.

A key driver of the sell-off was a strengthening US dollar, which gained 0.4 per cent during the week and is on track for its fourth consecutive weekly rise. A stronger dollar makes dollar-denominated gold more expensive for holders of other currencies, dampening demand.

Additionally, the easing of US-China trade tensions — following an agreement to reduce tariffs imposed earlier this year — has undermined gold’s appeal as a geopolitical safe haven. The market’s positive response to this de-escalation led to heavy selling pressure on the precious metal.

US economic data released during the week provided mixed signals: producer prices fell unexpectedly in April, retail sales slowed, and consumer inflation rose less than forecast.

Federal Reserve governor Michael Barr remarked that the US economy remains resilient and inflation is edging closer to the central bank’s 2 per cent target. Nevertheless, markets continue to anticipate interest rate cuts beginning September.

As gold yields no interest, lower rates usually support its price. However, with expectations for rate cuts now softening, gold’s near-term outlook appears constrained.

From a technical standpoint, analysts at Axis Securities cautioned that gold is in danger of breaching its 50-day moving average for the first time since December 2024 — a level that has underpinned every decline since November.

A break below $3,136 per ounce could lead to a deeper correction, with downside targets in the $2,875–$2,950 range. The period between 16 and 20 May is viewed as critical for gold’s price trajectory, and failure to hold current support could trigger further declines.

Despite the recent downturn, investor interest in gold remains strong. Market commentators suggest the dip could present a buying opportunity, particularly amid ongoing global economic uncertainties and inflation concerns. Tim Waterer, chief market analyst at KCM Trade, reaffirmed gold’s standing as a preferred asset class.

In India, Aksha Kamboj, vice-president of the India Bullion and Jewellers Association (IBJA), noted that the fall in prices is beneficial for long-term buyers — especially ahead of the wedding season — and could prompt increased physical investment in gold as part of strategic wealth planning.