Gold prices witnessed a sharp decline of nearly 2% on the Multi Commodity Exchange (MCX) on Wednesday, while silver plunged by almost Rs 19,000 per kilogram, tracking a global sell-off in precious metals. The fall was attributed to a stronger US dollar, rising bond yields, and diminishing safe-haven demand amid hopes of a US debt ceiling deal.
Gold and Silver Prices Today
On MCX, gold June futures tumbled Rs 1,063 or 1.97% to Rs 52,880 per 10 grams, after hitting an intraday low of Rs 52,760. Silver July futures crashed Rs 18,980 or 4.8% to Rs 3,77,000 per kg, after touching a low of Rs 3,75,000.
In the international market, spot gold fell 1.8% to $1,958.99 per ounce, while US gold futures dropped 2% to $1,961.20. Spot silver declined 4.5% to $23.68 per ounce.
Reasons Behind the Fall
Analysts pointed to multiple factors behind the sharp correction in precious metals:
- Strong US Dollar: The dollar index rose to a two-month high, making gold more expensive for holders of other currencies.
- Rising Bond Yields: US Treasury yields climbed, reducing the appeal of non-yielding assets like gold.
- US Debt Ceiling Optimism: Hopes that US lawmakers will reach a deal to raise the debt ceiling reduced safe-haven demand.
- Federal Reserve Hawkish Stance: Comments from Fed officials suggesting further rate hikes weighed on gold.
Impact on Domestic Markets
The fall in gold and silver prices also impacted other commodities. Copper prices declined on demand concerns, while crude oil slipped on stronger dollar. Investors shifted towards riskier assets like equities, with Indian benchmark indices trading higher.
Jewelers and retailers reported a surge in inquiries as customers awaited further price drops. However, analysts advised caution, as global uncertainties persist.
Outlook
Market participants will closely watch US jobless claims data and Federal Reserve speeches for further cues. If the dollar continues to strengthen, gold may test support levels around Rs 52,500 on MCX. Silver could see further downside towards Rs 3,70,000 per kg.
Long-term outlook remains positive due to central bank buying and geopolitical tensions, but short-term volatility is expected.
