A huge fall in the prices of gold and silver was recorded in the national capital on Monday. This decline has occurred due to weak domestic demand and global trends. Gold became cheaper by Rs 9,050 per 10 grams, while silver fell by Rs 10,500 per kg.
According to All India Bullion Association, gold of 99.9 percent purity fell by Rs 9,050. This is a decline of about six percent. Now the price of gold has become Rs 1,43,600 per 10 grams. Its closing price on Friday was Rs 1,52,650 per 10 grams. Silver also fell sharply by Rs 10,500 to Rs 2,30,000 per kg. This shows a decline of 4.36 percent. In the last trading session, silver had closed at Rs 2,40,500 per kg. Precious metals have extended last week’s losses. On Monday, spot gold slipped to a four-month low.
What are the main reasons for the decline?
Saumil Gandhi, Senior Analyst, Commodities, HDFC Securities has given several reasons for the decline. He cited the increasing tension in West Asia as the main reason. Due to this tension, the prices of crude oil have gone up. This has also increased inflation related concerns. The possibility of adopting aggressive monetary policy has also increased. Gandhi said US Treasury bond yields rose on the prospect of aggressive monetary policy. This also strengthened the dollar, which put additional pressure on gold and silver.
What is the situation of gold and silver prices in the global market?
A sharp fall in gold prices was also seen in the international market. Spot gold fell US$227.42 to US$4,263.73 an ounce. This was a decline of 5.06 percent. Silver also fell by US $ 4.25 to US $ 63.53 an ounce. This was a decline of 6.3 percent. Praveen Singh, head of commodities at Mirae Asset Sharekhan, said expectations of rising interest rates put pressure on prices. Last week, gold prices had fallen by more than 10 percent. This was the worst weekly fall for gold in four decades.
What is the forecast for the future?
NS Ramaswamy, head of commodities and CRM at Ventura, referred to the oil crisis due to the Iran conflict. This affected the revenue of those countries which were building gold reserves. Gold reserves have decreased due to low surplus. This has led to a huge decline in the demand for gold. Ramaswami said the central bank will not abandon its gold accumulation strategy due to temporary revenue shortfall. When oil flows normalize and surpluses increase again, structural demand for gold will be strong again.