On Thursday evening, the selling pressure on precious metals increased, driving both gold and silver to their lowest levels in several weeks on the MCX, despite ongoing geopolitical tensions in the Middle East. The drop occurs as investors reevaluate the prospects for interest rates and inflation, both of which persist in impacting the metals market.
The April gold futures contract experienced a significant decline, dropping ₹8,810 per 10 grams to reach a low of ₹1,44,215 per 10 grams, marking its lowest point since early February. This steep fall has further deepened the losses for the precious metal, resulting in an 11% decrease in March and reducing its year-to-date returns to only 6.60%, according to Mint. In the retail market, the price of 24-carat gold in India was approximately ₹1,41,577 per 10 grams on Thursday.
Silver experiences a sharper decline, reaching levels last seen in December.
Silver, known for its higher volatility compared to gold, experienced a more significant drop. The price of the white metal fell by ₹25,500 per kilogram to ₹2,22,234, reaching its lowest point since the end of December.
Following Thursday's drop, silver's losses for the month have expanded to 21%, setting it up for a second straight monthly decrease. Intensifying the situation, oil prices rose further on Thursday following a series of strikes between Iran and Israel targeting major energy sites in the Gulf area.
The conflict, which has been ongoing for almost three weeks, has led to an increase in crude oil and gas prices, contributing to inflation. Consequently, this diminishes the chances of interest rate reductions by the Federal Reserve and other central banks, a significant factor affecting precious metals.
Gold's recent trends have been likened to its path in the summer of 2022, a period marked by Russia's invasion of Ukraine, which led to a global energy crisis and market instability.Although the volatility in precious metals has somewhat diminished from the dramatic changes observed earlier this year, persistent fluctuations still discourage some investors who typically consider gold a safe investment.
Patrick Armstrong, the chief investment officer at Plurimi Wealth LLP, informed Bloomberg that it is no longer a secure refuge but rather a speculative asset.