Precious metal prices declined up to 4 per cent in the national capital on Friday, with silver tumbling to Rs 2.65 lakh per kilogram and gold sliding to Rs 1.63 lakh per 10 grams amid a strong US dollar and uncertainty over global monetary policy.
According to the All India Sarafa Association, the white metal slumped by Rs 11,000, or 3.97 per cent, to Rs 2,65,500 per kilogram (inclusive of all taxes) from Thursday's closing level of Rs 2,76,500 per kg.
In the bullion market, gold of 99.9 per cent purity also declined by Rs 2,000, or 1.21 per cent, to Rs 1,63,200 per 10 grams (inclusive of all taxes). The yellow metal finished at Rs 1,65,200 per 10 grams in the previous session.
Gold prices in the domestic market faced sustained pressure from a resurgent US dollar and shifting expectations regarding monetary easing, Dilip Parmar, Senior Research Analyst, HDFC Securities, said.
He said that the intensifying conflict in Iran has sent crude oil prices soaring, stoking inflationary fears that may force the central banks to maintain a hawkish stance for an extended period. “While short-term volatility and long unwinding by traders may persist, the outlook remains constructive. Once geopolitical tensions stabilise, a resurgence in central bank acquisitions and retail investment is expected to provide a strong floor for prices,” Parmar said.
In the international market, spot silver was trading nearly 1 per cent lower at USD 83.14 per ounce, while gold went up marginally to USD 5,088 per ounce.
“Gold prices have retreated for a second consecutive week, shedding nearly 1.5 per cent in international markets to trade below USD 5,100 per ounce,” Aamir Makda, Commodity & Currency Analyst at Choice Broking, said.
The primary catalysts for this decline are a strengthening US dollar -- bolstered by rising oil prices and geopolitical concerns in the Middle East -- and a surge in US Treasury yields, placing significant pressure on the precious metal, he added.
Concerns have also grown over the Federal Reserve's approach toward rate cuts as previous FOMC meeting minutes and recent expectations do not show much inclination towards monetary easing. Investors are shifting their focus to the US growth data, which could provide insights into the overall economic health.
Also read: Gold, silver prices remain high
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