Gold and Silver Prices Take a Nosedive: What’s Behind the Market Turmoil?
Market Update: Precious Metals Plunge
New Delhi: On Monday, the prices of gold and silver experienced a significant drop, driven by profit-taking, a robust US dollar, and increasing real yields.
As of 3:30 PM, MCX gold futures for April fell by 6.91%, settling at Rs 1,34,506 per 10 grams. Similarly, MCX silver futures for May saw an 8.84% decline, priced at Rs 2,06,716 per kg.
Market analysts reported that this sharp decline has erased approximately $2 trillion in market capitalization within a few hours, primarily due to aggressive profit booking.
The US dollar gained strength, rising 0.45% intraday as the USD index reached 100.10, making gold and silver more expensive for investors holding other currencies. Additionally, the Indian rupee depreciated by 33 paise, hitting a record low of 93.86 against the US dollar.
Internationally, spot gold prices fell significantly, with Comex Gold dropping over 2.4% to $4,492 per ounce, while silver decreased by 4.7% to slightly above $67 per ounce.
Earlier in the day, gold prices had plummeted by more than 10%, reaching around Rs 1.29 lakh per 10 grams in the domestic futures market before recovering slightly.
Analysts pointed out that rising oil prices have escalated input costs and intensified recession fears among investors, leading to expectations of a prolonged high-interest rate environment. This potential for increased rates has pushed real yields higher, diminishing gold's attractiveness as a hedge against inflation.
Adding to market concerns, US President Donald Trump’s ultimatum to Iran regarding the Strait of Hormuz was set to expire on Monday. Trump warned that failure to open the shipping lanes could result in severe consequences for Iran’s power infrastructure.
In response, Iran threatened to target the energy infrastructure of Gulf nations, asserting that the Strait of Hormuz remains open and navigation continues, albeit under wartime conditions.
Market experts recommend that investors remain calm, continue their systematic investment plans (SIPs), and view market corrections as a chance to acquire more assets at reduced prices.