Silver tumbles Rs 9,000, gold declines Rs 2,950 amid weak global cues

New Delhi: Silver prices tumbled by Rs 9,000 to Rs 2.56 lakh per kg while gold prices dropped by Rs 2,950 to Rs 1.60 lakh per 10 grams in the national capital on Monday, according to the All India Sarafa Association.

Weak global trends and a stronger US dollar hit the precious metals, analysts said.

Silver dropped by Rs 9,000, or 3.4 per cent, to Rs 2,56,500 per kg (inclusive of all taxes) from Friday's closing level of Rs 2,65,500 per kg.

Gold of 99.9 per cent purity extended the losses for the third straight day, depreciating by Rs 2,950, or 1.81 per cent, to Rs 1,60,250 per 10 grams (inclusive of all taxes).

Traders attributed the fall in bullion prices to profit-booking and a shift in safe-haven demand toward the US dollar and bonds, as crude oil prices surged amid geopolitical tensions in West Asia.

"Gold prices are currently retreating as a massive unwinding of positions takes hold, triggered by the surge in crude oil prices. We are seeing a distinct rotation in haven demand, while investors are shifting capital away from precious metals and into the US Dollar and bonds," Dilip Parmar, Senior Research Analyst, HDFC Securities, said.

He added that this transition is driven by expectations that global central banks will pause interest rate adjustments to combat the inflationary 'tax' of energy supply disruptions stemming from the US-Iran conflict.

Parmar noted that gold and silver in the domestic market are showing clear signs of exhaustion as crowded trades unwind ahead of the financial year-end.

In the international market, bullion prices also traded lower, reflecting similar trends, with spot gold slipping below the USD 5,000 per ounce level, while silver fell beneath the USD 80 per ounce.

The yellow metal fell by USD 20.94, or 0.42 per cent, to trade at USD 4,998.31 per ounce, while silver fell USD 1.81, or 2.25 per cent, to USD 78.76 per ounce.

Gold is trading with a loss at around USD 4,992 per ounce in the overseas trade as a stronger US dollar weighed on prices, after expectations of near-term rate cuts by the Federal Reserve faded amid rising inflation concerns driven by elevated energy prices, Praveen Singh, Research Analyst, Mirae Asset ShareKhan, said.

Kaynat Chainwala, AVP Commodity Research, Kotak Securities, said bullion prices may remain soft in the near term with sharp moves in either direction unlikely in the absence of a significant shift in the geopolitical or policy outlook.

She added that traders are focusing on the upcoming Federal Open Market Committee's policy meeting for updated economic projections for clues on the policy outlook as the Fed is widely expected to maintain the status quo on rates.

"On the data front, the US Producer Price Index (PPI) and weekly jobless claims will be in focus for signals on the health of the broader economy.

"Having said that, with no signs of de-escalation in the ongoing US-Iran standoff, geopolitical risk remains the dominant market driver in the near term," Chainwala said.