Gold and silver prices in India have experienced a notable decline as investors react to the fragile ceasefire in West Asia, leading to profit booking and renewed concerns over inflation and energy prices.
Key Points
- Silver prices in New Delhi declined by Rs 7,800 to Rs 2.43 lakh per kilogram, a 3.10 per cent drop from Wednesday's closing.
- Gold of 99.9 per cent purity fell by Rs 1,500, or nearly 1 per cent, to Rs 1,54,900 per 10 grams.
- The decline in precious metal prices is attributed to investor profit booking and uncertainty surrounding the fragile ceasefire between the US and Iran in West Asia.
- Ongoing sporadic fighting, doubts over the Strait of Hormuz reopening, and alleged ceasefire breaches are weighing on market sentiment.
- Analysts suggest gold prices could approach $5,000 per ounce in overseas trade in the near term, with consolidation expected ahead of the US CPI report.
Silver prices declined by Rs 7,800 to Rs 2.43 lakh per kilogram in the national capital on Thursday while gold fell to Rs 1.54 lakh per 10 grams as investors booked profits amid concerns over the durability of the fragile ceasefire in West Asia.
According to the All India Sarafa Association, the white metal depreciated by Rs 7,800, or 3.10 per cent, to Rs 2,43,200 per kg (inclusive of all taxes) from Wednesday's closing level of Rs 2,51,000 per kg.
Gold of 99.9 per cent purity also decreased by Rs 1,500, or nearly 1 per cent, to Rs 1,54,900 per 10 grams (inclusive of all taxes).
The yellow metal had finished at Rs 1,56,400 per 10 grams in the previous market session.
Market Sentiment and Geopolitical Factors
Analysts said precious metals witnessed selling pressure as uncertainty around the ceasefire between the US and Iran weighed on investors' sentiment.
"Gold prices declined on Thursday, reversing most of the previous session's gains as investors reassessed the fragile ceasefire in West Asia," Saumil Gandhi, Senior Analyst of Commodities at HDFC Securities, said.
He added that the ongoing sporadic fighting, uncertainty over the reopening of the Strait of Hormuz, and reports of halted tanker movements alongside the alleged ceasefire breaches weighed on market sentiment.
"Persistent doubts over the durability of the two-week truce have revived concerns about elevated energy prices and inflation pressures," Gandhi added.
Global Trends and Future Outlook
In the global markets, spot gold went up by $21.28, or 0.45 per cent, to $4,740.63 per ounce while silver was trading marginally higher at $74.12 per ounce.
"Gold has extended its gains to the fourth straight day on dollar weakness," Praveen Singh, Head of commodities at Mirae Asset ShareKhan, said.
However, the US-Iran ceasefire appeared fragile amid reports of continued fighting in Lebanon and uncertainty surrounding the Strait of Hormuz, he added.
Iran has also suggested alternative routes, citing risks of mines in the main shipping zone, while crude oil prices are attempting to stabilise, limiting recovery in commodities and risk assets, Singh noted.
Meanwhile, US President Donald Trump has threatened action against Iran if a deal is not reached and directed US military assets to remain in place until the agreement is fully complied with.
The minutes of March 18 meeting of Federal Open Market Committee (FOMC) showed that the US Federal Reserve remains in a 'wait and watch mode' as employment and inflation risks become more balanced.
Singh said gold is trading around $4,730 per ounce and is likely to consolidate ahead of the crucial US Consumer Price Index (CPI) report for March scheduled to be released on Friday.
He further stated that gold prices in the overseas trade could approach $5,000 per ounce in the near term.
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