New Delhi | Gold prices slumped by Rs 9,050 to Rs 1.43 lakh per 10 grams while silver tumbled Rs 10,500 to Rs 2.30 lakh per kg in the national capital on Monday amid subdued domestic demand and weak global trends.
According to the All India Sarafa Association, gold of 99.9 per cent purity plunged by Rs 9,050, or nearly 6 per cent, to Rs 1,43,600 per 10 grams (inclusive of all taxes) from Friday's closing level of Rs 1,52,650 per 10 grams.
Silver also declined sharply by Rs 10,500, or 4.36 per cent, to Rs 2,30,000 per kg (inclusive of all taxes). The white metal had settled at Rs 2,40,500 per kg in the previous market session.
"Precious metals extended last week's losses, with spot gold slipping to a four-month low in intraday trading on Monday," Saumil Gandhi, Senior Analyst - Commodities at HDFC Securities, said.
He attributed the sharp fall to escalating tensions in West Asia, which pushed oil prices higher and stoked inflation concerns, raising the likelihood of a hawkish monetary policy stance.
"The prospect of a hawkish monetary policy boosted US Treasury bond yields and strengthened the dollar, adding further pressure on gold and silver," Gandhi said.
In the international market, spot gold fell USD 227.42, or 5.06 per cent, to USD 4,263.73 per ounce, while silver fell USD 4.25, or 6.3 per cent, to USD 63.53 per ounce.
Spot gold extended its decline in overseas markets as rising interest rate expectations weighed on prices, Praveen Singh, Head of commodities at Mirae Asset ShareKhan, said.
He noted that gold prices dropped more than 10 per cent last week, marking their worst weekly decline in more than four decades, as expectations of rate cuts shifted towards potential rate hikes.
NS Ramaswamy- Head of Commodity & CRM at Ventura, said the recent oil shock caused by the Iran conflict has choked the revenue streams of countries that were building gold reserves.
Smaller surpluses led to a slower pace of reserve accumulation and less demand for gold, which had served as the alternative reserve currency of choice, he added.
"Gold performs well in such a crisis, but the disruption of the global capital flows has underpinned the gold bull market.
"Central banks will not abandon their gold accumulation strategies because of a temporary revenue shortfall. When oil flows normalise and surpluses recover, the structural bid for gold will reassert itself," Ramaswamy said.
