Amidst the ongoing tensions in West Asia, gold and silver prices witnessed a decline on the MCX on Monday. The price of silver fell by ₹20,400, settling at ₹2.06 lakh per kilogram. Meanwhile, gold prices dropped by ₹9,759 to reach ₹1.34 lakh per 10 grams.
Gold and Silver Prices in the International Market
In the global market, gold prices have recorded a sharp decline over the past week—a drop considered to be the largest weekly slump in the last 40 years. Prices have fallen from $5,200 to $4,354 per ounce. Both precious metals witnessed selling pressure amidst rising geopolitical tensions and a strengthening US dollar.
On COMEX, gold prices fell by nearly 3% to $4,462 per ounce. Notably, gold had already tumbled by approximately 11% the previous week—a decline considered its steepest weekly drop since 1983. Meanwhile, during Asian trading hours, silver prices also dropped by nearly 3% to reach $67.5 per ounce.
Why Are Gold and Silver Prices Falling?
According to experts, the surge in crude oil prices has heightened concerns regarding inflation. Consequently, expectations of an imminent interest rate cut by central banks—including the US Federal Reserve—have diminished. Since gold is a non-yielding asset, demand for it tends to decline in such an environment, thereby exerting downward pressure on prices.
Furthermore, the strengthening of the US dollar and US bond yields is also proving detrimental to gold and silver. A strong dollar makes gold more expensive for investors holding other currencies, which, in turn, leads to a decline in demand.
West Asia Tensions Heighten Uncertainty
Volatility in the oil market intensified further after US President Donald Trump issued an ultimatum to Iran to reopen the Strait of Hormuz within two days. He warned that failure to do so could result in potential attacks on Iran’s power plants.
In response, Iran warned that if its installations were attacked, it could completely block this vital maritime route and target energy, IT, and water supply infrastructure.
Market Jitters Amidst Military Activity
According to a Reuters report, the United States is deploying thousands of additional Marines and naval personnel to West Asia. This has further escalated tensions in the region—an impact clearly visible in global financial markets.
Analysts note that market uncertainty and risk levels are currently elevated. Consequently, investor sentiment is shifting toward safer yet yield-generating alternatives, a trend that could keep gold and silver prices under pressure.
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