In a dramatic twist to the bullion market, gold prices in the national capital dropped sharply by ₹1,000, settling at ₹1,01,520 per 10 grams on Tuesday. The steep decline mirrors a broader sell-off in global precious metals markets, triggered by easing trade tensions and shifting investor sentiment.
According to the All India Sarafa Association, gold of 99.9% purity, which had closed at ₹1,02,520 per 10 grams on Monday, witnessed a sudden downturn. Similarly, gold of 99.5% purity slid to ₹1,01,100 per 10 grams (inclusive of all taxes).
Why Gold Prices Dropped So Suddenly
Market analysts attribute this decline to a combination of international policy developments and macroeconomic factors.
The key trigger came from U.S. President Donald Trump, who clarified via social media that no tariffs would be imposed on gold imports. This announcement eased fears of higher import costs, leading to a downward correction in gold prices.
Although the White House has yet to issue an official statement, the message was enough to calm trade-related concerns.
“Trump’s announcement changed the sentiment overnight. Many investors who were expecting gold prices to climb further are now booking profits,” said Chintan Mehta, CEO of Abans Financial Services.
Gold Prices: Impact of U.S.-China Trade Relations
Adding to the shift in market mood, the White House confirmed on Monday that the suspension of high-level tariffs on Chinese imports will be extended until November 11.
This move has temporarily reduced macroeconomic tensions between the two largest economies in the world — a development that usually pushes investors away from safe-haven assets like gold and towards riskier investments.
“Global investors tend to turn to gold during uncertainty. But when there’s a hint of stability in U.S.-China relations, demand for bullion eases, and prices respond accordingly,” Mehta explained.
Silver Suffers Bigger Losses
It wasn’t just gold that took a hit — silver prices fell even harder. On Tuesday, silver tumbled by ₹2,000 per kilogram, closing at ₹1,12,000 (inclusive of taxes) compared to Monday’s ₹1,14,000.
In the international market, however, the picture was mixed. While spot gold in New York edged 0.13% higher to $3,347.18 per ounce, silver rose nearly 1%, trading at $37.90 per ounce.
Gold Prices: Trump’s Statement Allays Import Fears
According to Renisha Chainani, Head of Research at Augmont, Trump’s comment about exempting gold from tariffs directly influenced the domestic bullion market.
“Monday’s statement removed fears of a dramatic spike in gold import prices. That psychological relief was enough to push global prices below $3,400 per ounce,” she noted.
Gold Prices: What to Watch Next: U.S. Economic Data & Fed Moves
While the current drop in gold prices has caught attention, experts warn that the real volatility may still be ahead. Investors are closely watching upcoming U.S. macroeconomic indicators, including:
- Consumer Price Index (CPI)
- Producer Price Index (PPI)
- Retail Sales Data
These figures will give fresh clues about the Federal Reserve’s interest rate path. A stronger U.S. dollar typically puts pressure on gold prices, while rate cuts could boost demand for the yellow metal.
“Speeches from Federal Reserve officials this week will be critical. Even a small policy hint could sway the bullion market,” Chainani added.
Gold Prices: Geopolitical Factors at Play
In addition to trade and monetary policy, geopolitical developments are influencing bullion sentiment.
According to commodities analysts, there is speculation that the upcoming meeting between Donald Trump and Russian President Vladimir Putin on Friday, August 15, 2025, could result in a truce plan for the ongoing Russia-Ukraine conflict.
If peace talks gain momentum, demand for gold as a safe-haven asset may weaken further. “When geopolitical risks reduce, investors often shift funds towards equities and other growth-oriented assets, putting pressure on gold,” an analyst said.
Domestic Jewellery Market Reaction
Jewellers in India have already begun to feel the effects of the price drop. Some are reporting a slight pickup in retail buying, particularly among customers who had delayed purchases due to soaring prices earlier this month.
However, industry insiders caution that the demand boost may be short-lived if global prices remain volatile.
Global Gold Outlook for the Coming Weeks
Looking ahead, market watchers believe that while short-term pressure on gold prices is likely, the medium-term outlook remains tied to:
- The trajectory of U.S. interest rates
- China-U.S. trade negotiations
- Geopolitical stability in Eastern Europe
- Inflation trends in major economies
If inflation data remains strong and geopolitical risks resurface, gold could quickly regain lost ground.
Gold Prices: Summary of Key Price Movements (August 12, 2025)
| Commodity | Previous Price (Aug 11) | Current Price (Aug 12) | Change |
|---|---|---|---|
| Gold (99.9% purity) | ₹1,02,520 / 10g | ₹1,01,520 / 10g | -₹1,000 |
| Gold (99.5% purity) | ₹1,02,100 / 10g | ₹1,01,100 / 10g | -₹1,000 |
| Silver | ₹1,14,000 / kg | ₹1,12,000 / kg | -₹2,000 |
Investor Takeaway
For investors, the message is clear: gold remains a safe-haven asset, but short-term prices are vulnerable to policy shifts, global trade developments, and central bank actions. Those considering entering the market should watch both domestic and global cues closely.
As the next U.S. inflation and Fed interest rate updates roll in, the bullion market could see another round of sharp swings — up or down.