Selling pressure in precious metals deepened in Thursday’s evening session, pushing both gold and silver to multi-week lows on MCX, even as tensions in the Middle East remained elevated.
The April gold futures contract has ₹8,810 per 10 grams”>crashed ₹8,810 per 10 grams to reach the day’s low of ₹1,44,215 per 10 grams, marking the lowest level since early February. Today’s sharp fall in the yellow metal has led to an 11% decline in March so far and has also reduced year-to-date returns to just 6.60%.
Silver, which is more volatile than gold, has fallen even more sharply, dropping ₹₹2,22,234″>25,500 per kilogram to ₹2,22,234, marking the lowest level since late December.
With today’s decline, the white metal’s month-to-date fall has widened to 21%, putting it on track for a second consecutive monthly decline.
Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said, “Gold remains technically weak, with resistance now shifting lower towards ₹1,50,000, while key support is seen in the ₹1,44,000– ₹1,42,000 zone. The overall short-term trend remains weak to volatile, and price action will continue to react sharply to developments in interest rate expectations and geopolitical cues.”
Inflation risks, stronger dollar and delayed rate cuts pressure gold, silver prices
Despite geopolitical tensions typically supporting safe-haven demand, the ongoing US-Iran war has pushed oil and gas prices to multi year highs, fueling inflationary risks, which make rate cuts by the Fed and other central banks less likely. This is a headwind for gold, which doesn’t pay interest. A stronger dollar has also weighed on commodities.
The Federal Reserve held interest rates steady at its latest meeting on Wednesday and projected just one cut this year, with Chair Jerome Powell saying a reduction would need inflation to slow. The conflict makes developments for the US economy “uncertain,” Fed officials said in a statement.
At the same time, the tensions have triggered a sharp rise in demand for the US dollar, with funds flowing back to the US, keeping demand for the world’s reserve currency elevated.
The stronger dollar makes commodity prices more expensive for holders of other currencies, thereby limiting demand for gold and silver.
COMEX gold, silver extend losses; hit multi-week lows
The April gold delivery contract on COMEX fell $304 per troy ounce to the day’s low of $4,580, extending losses to a second straight session and hitting its lowest level since February 2.
Meanwhile, silver prices witnessed an even sharper sell-off, plunging $10.35 per troy ounce to $67.23, marking the lowest level since February 6.
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