Gold and silver prices saw a significant decline on Monday, driven by profit-taking, a stronger US dollar, and rising real yields. MCX gold April futures fell by 6.91% to Rs 1,34,506 per 10 grams, while MCX silver May futures dropped by 8.84% to Rs 2,06,716 per kg.
Market analysts observed a sharp selloff leading to a loss of about $2 trillion in market value within hours, primarily attributed to strong profit booking. The US dollar strengthened by 0.45% on an intraday basis, with the USD index rising to 100.10, making dollar-priced bullion more expensive for holders of other currencies.
International spot gold prices traded notably lower, with Comex Gold declining over 2.4% to $4,492 an ounce, and silver falling by 4.7% to just above $67 per ounce. Gold prices had initially dropped by over 10% to around Rs 1.29 lakh per 10 grams in the domestic futures market but later recovered.
Analysts highlighted that surging oil prices have increased input costs and raised recession fears among investors, leading to expectations of a prolonged period of higher rates. This anticipation of higher rates pushed real yields up, diminishing bullion’s attractiveness as an inflation hedge.
US President Donald Trump’s 48-hour ultimatum to Iran to fully open the Strait of Hormuz, expiring on Monday, raised concerns among commodities traders. Trump had warned of severe consequences if the shipping lanes remained closed, while Iran’s administration responded with threats to attack energy infrastructure of Gulf countries.
Market experts advised investors to remain calm, stick to their systematic investment plans (SIPs), and view market corrections as an opportunity to accumulate more units at lower prices.
