Sharp drop in gold and silver prices: new rates after the decline

On the first trading day in the commodity market (MCX), prices for gold and silver saw a decline. The price of gold dropped to 153050 rupees, while silver traded at 2,39,399 rupees per kilogram. In gold, a drop of 1300 rupees was recorded.

Similarly, the price of silver decreased by 2400 rupees. This fall occurred against the backdrop of a general downturn in the international market. On the COMEX exchange, gold was also under pressure, with its price at $4.416 per ounce, and silver fluctuated between $66.550 and $67.555 per ounce.

The main reason for the decrease in gold and silver prices is the rise in the yield on US Treasury bonds. High yields put pressure on gold because this metal does not generate interest income. Furthermore, the strengthening of the US dollar compared to other currencies intensified the downward pressure on gold prices.

Events occurring in the Middle East previously supported gold and silver prices by attracting people to 'safe haven' assets during periods of tension. However, the influence of this factor weakened due to fluctuations in yields and the dollar exchange rate, leading to a decrease in precious metal prices.

A decline in gold and silver prices is also observed in the Indian precious metals market. The price of 24-karat gold fell by 700 rupees, reaching 1.53 lakh rupees. The price of 22-karat gold is 1,52,200 rupees per 10 grams, and 18-karat gold is sold at 1,14,752 rupees per 10 grams.

On Thursday, the fourth working day of the week, a significant drop was observed in the prices of gold and silver. As futures trading began on the Multi Commodity Exchange (MCX), silver fell from over 4500 rupees to the level of 2.30 lakh rupees per kilogram. Simultaneously, the price of gold also sharply decreased, dropping by 2000 rupees to reach the mark of 1.50 lakh rupees per 10 grams.

Analysis of changes in the MCX markets showed that silver with a December 4 expiry plummeted to 2,30,221 rupees per kilogram, whereas it traded at 2,34,786 rupees on the previous business day, indicating a fall of 4,565 rupees. Regarding gold, the price for 10 grams of 24-karat gold decreased by 1987 rupees compared to the previous closing of 1,52,470 rupees, settling at 1,50,483 rupees.

The first reason for this sharp decline in gold and silver prices was the decision made by the US Federal Reserve (US Fed) regarding the interest rate. During the meeting led by Fed Chairman Kevin Warsh, an increase in the interest rate by 25 basis points, or 0.25 percent, was announced. Thus, the rate rose from 3.75% to the range of 4%. Raising interest rates puts pressure on the precious metals market, leading to a decrease in their value.

The second factor contributing to the price drop is the strengthening of the US dollar. The US Federal Reserve raised interest rates by 25 bps, which was the first increase since 2023, and hinted at another rate hike this year. Following this, the dollar index exceeded the 100 mark, and the strengthening of the dollar in the international market put pressure on precious metal prices.

The third reason is related to the yield on US bonds. Bond yields in America reached 5%, which was also a significant reason for the decline in gold and silver prices. This occurs because when bond yields rise, investments in assets like gold and silver, which do not generate interest, become less attractive, creating downward pressure on their prices. Investors prefer to place funds in bonds instead of gold when US Treasury yields increase.

The fourth reason is the rise in commodity inflation. Tensions in West Asia persist, and crude oil prices remain above the $100 mark. By the time the news was published, the price of Brent Crude exceeded $105 per barrel. The rise in international oil prices increases the risk of global inflation, which is reflected in the prices of precious metals.

The fifth reason is global tension. Ongoing tensions in the Middle East often lead to sell-offs of precious metals amid geopolitical instability, causing a drop in gold and silver prices. If the prices of gold and silver have already risen significantly before news of war or other events emerges, investors begin to take profits, leading to a decrease in metal prices on the commodity market.

Those planning to invest in gold or silver, or buy them directly, are advised to check the latest precious metal prices, as significant fluctuations were observed in the prices of gold and silver on Wednesday.

At the opening of trading on the Multi Commodity Exchange (MCX), the prices of these metals initially decreased. For example, the price of silver with an expiration date of December 4 fell by 494 rupees, dropping from the previous close of 2,39,427 rupees per kilogram to 2,38,933 rupees.

Gold with an expiration date of October 5 weakened, reaching 1,52,101 rupees for 10 grams, compared to 1,52,579 rupees.

Despite the initial decline during the early trading on the futures market, the situation quickly changed. Both precious metals began to rise rapidly, moving from the red zone to the green zone. As of the time of writing, the price of 24-carat gold per 10 grams exceeded 1,53,599 rupees, and the price of silver per kilogram rose to 2,41,320 rupees.

Even despite the strong fluctuations on Wednesday and the subsequent rise, the price of silver remains significantly below its historical high. In late January, silver reached a peak level of 4,20,048 rupees, whereas now it is available 1,78,728 rupees cheaper per kilogram.

After trading on MCX, price changes occurred in the domestic market. According to data from the Indian Bullion Jewelers Association (IBJA.Com) website, 10 grams of 24-carat gold opened with a slight increase at 1,53,432 rupees. The price of silver showed a noticeable jump, increasing from Tuesday's close of 2,33,826 rupees to 2,35,717 rupees per kilogram.

It is important to note that the prices of gold and silver in the domestic market are based on updated IBJA rates and remain uniform across the country. However, when purchasing jewelry in stores, customers must pay not only GST but also a making charge, which increases the final cost. The making charges for gold and silver can vary in different cities across the country.