Geopolitical uncertainty in West Asia and the fragile ceasefire between the US and Iran have begun to have a direct impact on the Indian bullion market. Driven by heavy profit-booking by investors, a significant decline was recorded on Thursday in the prices of both precious metals gold and silver in the national capital. This global turmoil has dampened market sentiment, giving rise to fresh concerns at both global and domestic levels.
Major Price Drop In The Domestic Market
According to official data from the ‘All India Bullion Association,’ the price of silver in Delhi witnessed a massive decline of ₹7,800 or 3.10 percent falling to the level of ₹2.43 lakh (₹243,200) per kilogram. During Wednesday’s trading session, its closing price stood at ₹2.51 lakh (₹251,000) per kilogram. Similarly, the price of gold with 99.9 percent purity also recorded a decrease of ₹1,500, or approximately 1 percent. Following this decline, gold prices settled at ₹1.54 lakh (₹154,900) per 10 grams, whereas it had closed at ₹1.56 lakh (₹156,400) per 10 grams in the previous trading session. It is worth noting that all these prices are inclusive of all applicable taxes.
Fragile Ceasefire And Supply Chain Crisis
Market analysts believe that the uncertainty surrounding the ceasefire between the US and Iran has severely impacted investor sentiment. Saumil Gandhi, Senior Analyst (Commodities) at HDFC Securities, clarified that the gains witnessed in gold prices during the previous session were entirely erased as investors re-evaluated the fragile ceasefire situation in West Asia.
He also noted that intermittent fighting, doubts regarding the reopening of the Strait of Hormuz, the suspension of tanker movements, and persistent reports of ceasefire violations have exerted immense pressure on market sentiment. Consequently, concerns regarding rising energy prices and inflation have once again begun to resurface. Praveen Singh, Head of Commodities at Mirae Asset Sharekhan, also described the ceasefire as “extremely fragile,” citing the ongoing conflict in Lebanon and the prevailing uncertainty surrounding the Strait of Hormuz.
Global Market Dynamics And Geopolitical Pressures
In contrast to the decline witnessed in the domestic market, precious metals have recorded modest gains on the global stage. According to Praveen Singh, gold has maintained its upward trajectory in international markets for the fourth consecutive day, driven by a weakening U.S. dollar. In the international spot market, gold rose by $21.28 or 0.45 percent to reach $4,740.63 per ounce, while silver is also trading with a slight uptick at $74.12 per ounce.
Meanwhile, Iran has suggested alternative trade routes, citing the risk of mines in key shipping lanes; this development is contributing to efforts to stabilize crude oil prices while simultaneously limiting the recovery of commodities and risk assets. On the geopolitical front, U.S. President Donald Trump has warned that severe action will be taken against Iran if an agreement is not reached, and he has directed U.S. military assets to remain deployed in the region until full compliance with the agreement is achieved.
Furthermore, the minutes from the March 18 meeting of the U.S. Federal Reserve’s Federal Open Market Committee (FOMC) have clarified that, given that risks regarding employment and inflation are now more balanced, the Federal Reserve is currently adopting a “wait and watch” stance.
