Gold and silver prices witnessed a sharp decline in the Delhi bullion market on Wednesday, with gold falling by Rs 1,200 per 10 grams and silver dropping by Rs 4,000 per kg, according to analysts. The decline comes as traders continue to favour dollar-denominated assets, pushing silver back to levels last seen in early April.
Gold and Silver Prices Fall Sharply
Gold prices in Delhi dropped to Rs 1,65,000 per 10 grams, down from the previous close of Rs 1,66,200. The yellow metal had been trading in a narrow range over the past few sessions before this significant fall. Analysts attributed the decline to a strengthening US dollar and rising bond yields, which made non-yielding assets like gold less attractive.
Silver prices also took a hit, falling to Rs 2,37,000 per kg from Rs 2,41,000 per kg. The latest losses have pushed white metal prices to levels last observed in early April, when silver traded at around Rs 2,37,000 per kg. The drop in silver was more pronounced than gold, reflecting higher volatility in industrial metals amid global economic uncertainty.
Market Sentiment and Dollar Strength
The decline in precious metals is largely driven by shifting investor preference towards dollar-denominated assets. The US dollar index has been hovering near multi-month highs, supported by expectations of further interest rate hikes by the Federal Reserve. This has reduced the appeal of gold and silver as alternative investments.
According to analysts, the trend is likely to continue in the near term unless there is a significant change in monetary policy or geopolitical tensions that boost safe-haven demand. Traders are advised to monitor global cues, including US economic data and central bank announcements, for further direction.
Impact on Local Markets
The price drop in Delhi mirrors trends in other major Indian cities, though regional variations may exist due to local taxes and demand-supply dynamics. The fall in silver prices could benefit industries that use the metal in electronics, solar panels, and jewellery manufacturing. However, investors holding silver may face short-term losses.
Market participants are now eyeing the upcoming US jobs report and inflation data for clues on the Fed's policy path. A weaker-than-expected economic outlook could revive interest in precious metals as a hedge against uncertainty.
