Gold prices slumped by ₹4,300 to ₹1.56 lakh per 10 grams, while silver prices crashed by ₹10,000 to ₹2.45 lakh per kg in the national capital on Wednesday. This significant drop is attributed to a fresh surge in crude oil prices and a strengthening US dollar, which weakened demand for precious metals.
Market Drivers
According to Rajkumar Subramanian, Head of Product & Family Office at PL Wealth, the sharp reversal in gold prices was driven by escalating US-Iran geopolitical tensions. This situation pushed crude oil prices past USD 90 per barrel, strengthening the dollar and rekindling worries over inflation and prolonged elevated interest rates, which reduced the attractiveness of precious metals.
Supply and Inventory
In the international markets, spot gold declined by USD 90.53, or 2.13%, to USD 4,168.99 per ounce, while silver traded 2.24% lower at USD 63.87 per ounce. The pullback in both precious metals was driven by a stronger dollar and rising US Treasury bond yields, according to Gaurav Garg, Research Analyst at Lemonn Markets Desk.
Demand Trends
The spike in energy prices has raised concerns over sticky inflation, which could lead to a prolonged period of elevated interest rates. This scenario diminishes the appeal of non-yielding assets like gold and silver, as investors seek higher returns elsewhere.
Price Outlook
The ongoing geopolitical tensions and inflation concerns are likely to continue influencing the bullion market. Traders and analysts will be closely monitoring upcoming economic data releases and geopolitical developments to gauge future price movements.
| Commodity | Previous Price | Current Price | Change |
|---|---|---|---|
| Gold (10g) | ₹1,60,300 | ₹1,56,000 | -₹4,300 |
| Silver (1kg) | ₹2,55,700 | ₹2,45,700 | -₹10,000 |
The current market dynamics highlight the importance for commodity traders and analysts to stay informed about geopolitical events and their potential impact on commodity prices.
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