Silver nosedived 9% and gold prices plunged 3% in afternoon trade, tracking a sharp fall in global markets amid mounting US inflation concerns and renewed expectations of interest rate hikes by the Federal Reserve.
Analysts stated that a stronger dollar, rising US Treasury bond yields and broad-based weakness across the precious metals complex weighed on silver and gold prices. Additionally, gold and silver future prices are seeing a heavy sell-off in today’s trade after the Govt introduced the tighter import norms.
#1 MCX Gold and Silver futures post sharp declines
On the Multi Commodity Exchange, the most-active contract for silver futures was down 6% quoted at Rs 2,73,601 per kg, while the most-active contract gold futures was trading at Rs 1,58,872 per 10 grams down 2%.
The price on MCX takes cues from global trends, as in international markets spot gold fell by more than 4% quoted near the $4,557 per ounce mark, down from its recent high of $4,773 per ounce.
As for the restless silver, the white metal was trading near the $78 per ounce mark down over 12% from its recent highs of $89. “Hotter‑than‑expected inflation data and a firmer dollar stripped momentum from both metals,” said Kaynat Chainwala, Assistant Vice-president of Commodity Research at Kotak Securities.
The Kotak analyst added that the catalyst was a bruising week of US price data: consumer inflation rose to 3.8% in April, the highest since May 2023, while wholesale prices accelerated at their fastest pace since 2022, both prints driven substantially by energy costs flowing from Hormuz supply disruptions.
#2 Stricter Import norms add to headwinds
On May 13, the Indian government raised tariff duties on import of gold and silver to 15% from 6%, followed by a cap of 100 kg on duty-free gold imports for jewellery exporters announced on May 14. While the market participants said the move came in to curb arbitrage trade and ease forex pressure, it added to a headwind for precious metals.
“India’s decision to raise import tariffs on gold and silver added a further demand headwind, threatening to curtail one of the market’s most reliable physical‑buying cushions,” added the analyst at Kotak.
#3 Elevated crude prices keeps markets on edge
Oil prices have been trading at elevated levels for nearly 11-weeks now as the chokepoint- Strait of Hormuz, which transits nearly 20% of the global energy flows remains largely closed. Over the past few weeks oil has been over the $100 per barrel mark.
Brent crude was priced at $109 per barrel mark, while the US benchmark, West Texas Intermediate, was quoted near the $105 per barrel level. High fuel prices have deepened concerns over supply disruptions linked to the West Asia conflict.
“The tightening supply backdrop has kept the geopolitical risk premium elevated, with the IEA warning that the oil market could remain severely undersupplied through October even if tensions ease in the coming months, “ Chainwala added.
Markets await US-China trade talk outcome
US President Donald Trump concluded his China visit, and described talks with the country’s president Xi Jinping as ‘incredible’. The MAGA leader said that both sides discussed Iran and the Strait of Hormuz.
“We did discuss Iran. We feel very similar about how we want it to end. We don’t want them to have a nuclear weapon. We want the Strait open,” Trump said.
Traders now await clearer outcomes from the ongoing US‑China talks, which will provide for further cues on gold and silver prices.
Outlook for MCX Gold
“MCX Gold June futures is likely to drop to Rs. 161,500/10g and Rs. 162,500/10g is a cap for intraday today,” said Jigar Trivedi, Senior Research Analyst at IndusInd Securities
