NEW DELHI, March 23: Gold and silver prices in the domestic market witnessed a sharp decline of more than 7pc on Monday, driven by ongoing tensions in West Asia, global economic uncertainty, and a strengthening US dollar that has shifted investor interest away from precious metals.
Gold prices fell steeply during the trading session, dropping from Rs 1,40,158 in early trade to a low of Rs 1,29,595. The metal later recovered slightly and was trading around Rs 1,34,000 levels, still marking a significant decline of over 7pc.
Silver prices mirrored the trend, falling more than 7pc to trade at Rs 2,09,797 per kg, after hitting an intraday low of Rs 1,99,643. The sharp swings highlight heightened volatility in the bullion market.
Market experts believes the decline was largely due to profit booking after a strong rally in recent weeks. Prices of both metals had surged significantly during the early phase of the West Asia conflict, as investors rushed to safe-haven assets, leading to elevated price levels and tight physical supply in some markets.
With prices at record highs, investors are now locking in gains, triggering a correction, analysts noted.
Another key factor weighing on gold and silver is the shift in global interest rate expectations. With crude oil prices remaining above USD 110 per barrel, concerns over rising inflation have intensified.
This has reduced the likelihood of interest rate cuts and increased expectations of possible rate hikes by central banks.
Higher interest rates typically dampen demand for gold and silver, as these assets do not offer fixed returns like bonds or interest-bearing instruments, making them less attractive in a high-rate environment.
The strengthening US dollar has also added pressure on bullion prices, as it makes gold and silver more expensive for holders of other currencies, thereby reducing global demand.
Analysts expect volatility to persist in the near term, with prices likely to remain sensitive to geopolitical developments, inflation trends, and central bank policy signals. (UNI)
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