A massive decline in gold and silver prices was recorded in the national capital. This slump has been driven by weak domestic demand and global trends. Gold became cheaper by ₹9,050 per 10 grams, while silver dropped by ₹10,500 per kilogram.
According to the All India Bullion Association, gold of 99.9% purity fell by ₹9,050. This represents a decline of approximately six percent. The price of gold now stands at ₹1,43,600 per 10 grams. On Friday, its closing price was ₹1,52,650 per 10 grams. Silver, too, witnessed a sharp decline of ₹10,500, settling at ₹2,30,000 per kilogram.
This marks a drop of 4.36 percent. In the previous trading session, silver had closed at ₹2,40,500 per kilogram. These precious metals have extended the losses incurred during the previous week. On Monday, spot gold slipped to a four-month low.
What Are The Key Reasons For The Decline?
Saumil Gandhi, Senior Analyst for Commodities at HDFC Securities, cited several reasons for the decline. He identified rising tensions in West Asia as a primary factor. These tensions have caused crude oil prices to rise, which, in turn, has heightened inflation-related concerns.
The likelihood of the adoption of an aggressive monetary policy has also increased. Gandhi noted that the prospect of an aggressive monetary policy led to a rise in US Treasury bond yields. This also strengthened the US dollar, thereby exerting additional pressure on gold and silver prices.
What Is The Status Of Gold And Silver Prices In The Global Market?
A sharp decline in gold prices was observed in the international market as well. Spot gold fell by US$ 227.42, dropping to US$ 4,263.73 per ounce. This represented a decline of 5.06 percent. Silver also fell by US$ 4.25, settling at US$ 63.53 per ounce.
This marked a decline of 6.3 percent. Praveen Singh, Head of Commodities at Mirae Asset Sharekhan, noted that rising expectations regarding interest rates exerted downward pressure on prices. Last week, gold prices witnessed a decline of over 10 percent. This constituted gold’s worst weekly decline in four decades.
What Is The Outlook For The Future?
N.S. Ramaswamy, Head of Commodities and CRM at Ventura, highlighted the oil crisis stemming from the conflict in Iran. This impacted the revenues of nations that were actively building up their gold reserves. Consequently, gold reserves have depleted due to reduced surpluses.
This has led to a significant decline in the demand for gold. Ramaswamy stated that central banks are unlikely to abandon their gold accumulation strategies merely due to a temporary shortfall in revenue. Once the flow of oil normalizes and surpluses begin to rise again, the structural demand for gold is expected to regain its strength.
