Gold fell further, by 6.39% or over Rs 9,000 to Rs 1,43,249 on Wednesday after Brent Crude prices plunged due to reports of attacking ramping up in the Persian Gulf leading to concerns over damaged oil infrastructure.
Gold futures saw a sharp correction on Thursday, falling over Rs 3,500 per 10 grams, as a stronger US dollar and a hawkish Federal Reserve outlook dampened investor sentiment. The decline also extended to silver, which continued its losing streak amid broad-based selling in precious metals.
Gold hit a new intraday low on the MCX, falling 4.04%, or over Rs 6,000, to Rs 1,46,859. Silver, meanwhile, fell 7.60%, or over Rs 18,000, to Rs 2,29,321 at 2:15 pm.
Similarly, on the MCX, gold futures for April delivery dropped Rs 3,616, or 2.36%, to Rs 1.49 lakh per 10 grams. Silver futures for May delivery fell even more sharply, declining Rs 9,031, or 3.64%, to Rs 2.39 lakh per kilogram - marking the seventh straight session of losses.
Global Cues Drag Bullion Lower
Weakness in domestic prices mirrored global trends. On the Comex, gold futures fell over 2.4% to around $4,775 per ounce, while silver prices dropped more than 6%. Spot gold slipped to its lowest level in over a month, pressured by a firm dollar that has emerged as a preferred safe haven in recent weeks. Since late February, gold prices have declined more than 9%, reversing part of the strong rally seen earlier this year.
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The primary trigger for the selloff has been the US Federal Reserve's latest policy stance. The Fed kept interest rates unchanged but signalled limited room for rate cuts this year, with policymakers indicating that inflation remains a concern.
Higher interest rates tend to weigh on gold, as the metal does not offer any yield, making it less attractive compared to interest-bearing assets. The stronger dollar has further added pressure, as it makes gold more expensive for global buyers.
War-Driven Volatility
While geopolitical tensions in the Middle East have typically supported gold prices, the current environment has seen a shift in safe-haven flows toward the US dollar instead. Rising oil prices and uncertainty around inflation have reinforced expectations that rates could stay higher for longer.
Analysts also point to some investors selling gold to meet margin calls in other asset classes, adding to the downward pressure. Despite the recent correction, gold remains up over 10% so far this year, although momentum has clearly weakened. With rate cut expectations fading and global uncertainty persisting, bullion could remain volatile in the near term.
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