Gold and silver prices crashed in the Indian domestic market on cues from the global market, where the Middle East conflict increased energy prices and ignited inflation concerns. It led to hopes of leading central banks keeping interest rates higher.
In the domestic market, gold prices dropped by 4.5 per cent or ₹6,990 to ₹147,889 per 10 gm against ₹1,54,879 at close on Wednesday, following the bearish sentiments in the global markets. Opening on a weak note at ₹151,637, the yellow metal continued to its downtrend with no buying support, according to the Indian Bullion and Jewellers Association of India data on Thursday.
At 1915 hours IST, gold for April delivery on MCX plunged by ₹9,966 to ₹1,43,049 per 10 grams, while June contract dipped 8 per cent to Rs 1,45,120.
Steady Fed rates
In the global market, gold nosedived by $257 or nearly 8 per cent to $4,561.90 an ounce. On COMEX, April gold contracts dropped to $4,555.14 an ounce. Prices have breached $4,700 as the US Fed held interest rates steady at 3.50-3.75 per cent, signalling uncertainty over the inflationary and economic impact of rising oil prices.
Silver, on the other hand, fell to ₹2,29,873 per kg against ₹2,49,907 at closed on Wednesday. On MCX, silver for delivery in May dropped by ₹27,254 a kg to ₹2,20,940.
In the global market, silver slipped by nearly 10 per cent or over $7 to $69/18 an ounce. On COMEX, silver May futures decreased to $69.34, a fall over over 10 per cent.
Manav Modi Commodities Analyst, Motilal Oswal Financial Services, said despite ongoing geopolitical tensions, bullion remained under pressure as markets focused on the likelihood of interest rates amid persistent inflation risks.
Crude above $100
Crude oil prices remained elevated above $100 per barrel as the US-Israel conflict with Iran showed no signs of easing, following reports of an Israeli strike that killed senior Iranian official Ali Larijani and a subsequent attack on the world’s largest natural gas field shared by Iran and Qatar. Disruptions in the Strait of Hormuz, a key global oil transit route, have pushed crude prices near four-year highs, intensifying concerns over energy-driven inflation, he added.
While the Fed maintained its long-term inflation target of 2 per cent, markets now expect policymakers to remain cautious, limiting upside in gold despite ongoing safe-haven demand, he said.
Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said gold witnessed a steep decline of over $100 in a single session and nearly $300 in the last two days due to strong macro headwinds continue to weigh on prices.
Recent data indicates gold has slipped to one-month lows near $4710, pressured by a stronger dollar and higher bond yields, he said.
Inflation risks
Despite geopolitical tensions typically supportinghaven demand, the current environment is dominated by inflation-led policy tightening expectations. Rising oil prices are further reinforcing inflation risks, reducing the likelihood of near-term rate cuts, he added.
Jigar Trivedi, Senior Research Analyst, Indusind Securities, said gold fell for a seventh day as the escalating war in the West Asia drove oil prices higher and reduced prospects for a US interest-rate cut in the near term.
Despite the recent fall, bullion prices are still up over 10 per cent so far this year, though upward momentum has stalled in recent weeks as prospects for a near-term rate cut have faded and some investors sold the metal to meet margin calls elsewhere in their portfolios, he said.
Renisha Chainani, head of research at Augmont, said gold and silver remain under pressure as elevated real yields continue to cap upside.