Gold and silver prices are crashing as global economic headwinds, including rising inflation and hawkish central bank policies, trigger a significant market selloff.
Key Points
- Silver prices in Delhi plummeted by Rs 17,800 per kg, while gold prices fell by Rs 7,000 per 10 grams due to a global commodity market selloff.
- The price declines are attributed to rising inflation concerns, hawkish stances from central banks like the US Federal Reserve and the Bank of Japan, and surging global crude prices.
- Geopolitical tensions, particularly the conflict between the US and Iran, are contributing to fears of oil supply disruptions and further fueling inflation, impacting precious metal prices.
- Analysts suggest that gold prices are under pressure as bond yields climb, with central bankers prioritising inflation concerns amid rising energy costs.
- Investors are closely monitoring policy decisions from the Bank of England and the European Central Bank for further market direction.
Silver prices tanked Rs 17,800 to Rs 2.38 lakh per kilogram in the national capital on Thursday, while gold dropped Rs 7,000 to Rs 1.53 lakh per 10 grams following a sharp selloff in global commodity markets.
According to the All India Sarafa Association, the white metal slumped by Rs 17,800, or nearly 7 per cent, to Rs 2,38,700 per kg (inclusive of all taxes) from Wednesday's closing level of Rs 2,56,500 per kg.
Silver has now declined sharply by Rs 1,65,800 per kilogram, or 41 per cent, from its lifetime high of Rs 4,04,500 per kg recorded on January 29.
Gold of 99.9 per cent purity also plunged by Rs 7,000, or 4.37 per cent, to Rs 1,53,300 per 10 grams (inclusive of all taxes) from the previous close of Rs 1,60,300 per 10 grams.
The yellow metal had fallen by Rs 29,700, or 16.23 per cent, from its all-time high of Rs 1,83,000 per 10 grams recorded on January 29.
Factors Influencing the Price Drop
Analysts attributed the steep fall in bullion prices to a combination of factors, including rising inflation concerns, hawkish central bank stances, particularly from the US Federal Reserve and the Bank of Japan, amid surging global crude prices.
Gold and silver prices resumed their downward trajectory on Thursday amid rising global inflation concerns, Gaurav Garg, Research Analyst at Lemonn Markets Desk, said.
He added that geopolitical tensions stemming from the ongoing conflict between the US and Iran, leading to fears of oil supply disruptions that could further fuel inflation.
Dilip Parmar, Senior Research Analyst, HDFC Securities, said a hawkish stance by the US Federal Reserve and a five-day exodus from gold exchange-traded funds have sent gold prices to their weakest levels since early February.
"As energy-driven inflation looms, the inflation remains a primary concern for central bankers, keeping the pressure firmly on gold as bond yields climb," he noted.
Precious metal prices also traded lower in the overseas trade. Spot silver tumbled by $4.88, or 6.48 per cent, to $70.49 per ounce, and gold declined $140.19, or nearly 3 per cent, to $4,678.69 per ounce.
Gold prices slipped below the $4,700 per ounce, witnessing a sharp correction of $100 in a single session and nearly $300 in the last two days, as strong macro headwinds continue to weigh on prices, Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, said.
On Wednesday, Federal Reserve Chair Jerome Powell acknowledged that rising crude oil prices will contribute to inflationary pressures while emphasising that the economic implications of the conflict remain uncertain.
Powell reiterated that inflation is still somewhat elevated, near-term expectations have risen due to energy prices, and the central bank will adopt a wait-and-watch approach as the situation evolves.
Manav Modi, Analyst - Commodities, Motilal Oswal Financial Services Ltd, said investors will now shift their focus to policy decisions from the Bank of England and the European Central Bank.
Market Outlook
On the outlook, Jateen Trivedi said the overall short-term trend remains weak to volatile, and price action will continue to react sharply to developments in interest rate expectations and geopolitical cues.
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