Friday was a day of great turmoil for the Delhi bullion market. A big fall was seen in the prices of precious metals, especially silver. Amid sluggish demand in the local market and global cues, silver prices fell by more than 5% in a single day to Rs 2.55 lakh per kg. Gold prices also witnessed a sharp decline, due to which investors and jewelers exercised caution.
Heavy correction in prices: What do the figures say?
According to data released by All India Bullion Association, there was widespread selling pressure in the market on Friday:
- The shine of silver fades: A huge fall of ₹13,500 was recorded in the price of silver. It fell 5.03% to close at ₹2,55,000 per kg (including all taxes). On Thursday it was stable at ₹2,68,500 per kg.
- Gold became cheaper: The price of gold of 99.9% purity also fell by Rs 2,400. It fell 1.5% to ₹1,58,500 per 10 grams, from ₹1,60,900 per 10 grams in the previous trading session.
Reason for market decline
According to Saumil Gandhi, Commodity Senior Analyst at HDFC Securities, this sharp fall in gold and silver prices was due to selling in the broader market on Friday. Investors are adopting a cautious approach ahead of the much-awaited US consumer inflation data, which has weighed on home prices. Apart from this, weak demand at the local level is also a major reason for this decline.
Domestic and global markets move in different directions
While prices have fallen in the domestic market, there were signs of recovery in the international market on Friday.
- International Recovery: According to Kainat Chainwala, AVP (Commodity Research), Kotak Securities, in the international market, spot silver was trading at $ 77.30 an ounce, up 3% and gold was trading at $ 4,968.40 an ounce, up about 1%.
- Recovery level: Later, silver reached $ 79 per ounce and gold reached $ 4,990 per ounce.
What are market experts saying?
Market analysts believe that the direction of precious metals is now completely dependent on US economic data.
Inflation figures: If inflation figures in the US soften, then expectations of interest rate cuts by the Federal Reserve will increase, which will provide stability to gold and silver prices. At the same time, if inflation persists, the Fed may stick to its ‘higher-for-longer’ policy, which will keep pressure on prices.
Geopolitical Tension: The easing of tensions on the Russia-Ukraine front and discussions about the resumption of US-Iran nuclear talks have slightly weakened the ‘safe haven’ demand for gold.
Impact of China and America on silver
Experts said that dual pressures were working on silver. On the one hand, there were weak data on existing home sales in the US, while on the other hand, there were concerns about slowing industrial demand in China ahead of the Lunar New Year holidays. However, the rise in the international market on Friday has indicated that buying at lower levels is returning.
This huge fall in the domestic market could be an opportunity for retail buyers, but the market’s eyes are based on the US CPI data. Unless global uncertainty and interest rate direction remains clear, the bullion market is likely to remain volatile.
