Indian gold prices dropped sharply on Thursday, with the precious metal sliding by ₹700 per gram to ₹147,889 per 10 grams, as global market trends and rising inflation concerns weighed on investor sentiment. The decline came amid growing uncertainty over the Middle East conflict, which has pushed energy prices higher and fueled fears of prolonged inflation. This has led to speculation that central banks, including the US Federal Reserve, may keep interest rates elevated for longer, reducing the appeal of gold as an investment.

Domestic Market Downtrend

According to the Indian Bullion and Jewellers Association, gold prices in the domestic market fell by 4.5 per cent or ₹6,990 to ₹147,889 per 10 grams, down from ₹154,879 at the close on Wednesday. The yellow metal opened on a weak note at ₹151,637 on Thursday and continued its downtrend with no significant buying support. At 1915 hours IST, gold for April delivery on the Multi Commodity Exchange (MCX) plunged by ₹9,966 to ₹1,43,049 per 10 grams, while the June contract dipped 8 per cent to ₹1,45,120.

Meanwhile, silver prices also saw a steep decline, falling to ₹2,29,873 per kg from ₹2,49,907 at the close on Wednesday. On MCX, silver for May delivery dropped by ₹27,254 a kg to ₹2,20,940. In the global market, silver slipped by nearly 10 per cent or over $7 to $69.18 an ounce, with May futures on the COMEX exchange falling to $69.34.

Global Market Pressures

In the global market, gold prices fell by $257 or nearly 8 per cent to $4,561.90 an ounce. April gold contracts on the COMEX exchange dropped to $4,555.14 an ounce. The decline followed the US Federal Reserve’s decision to hold interest rates steady at 3.50-3.75 per cent, a move that has introduced uncertainty about the economic impact of rising oil prices and inflation.

Manav Modi, a commodities analyst at Motilal Oswal Financial Services, noted that despite ongoing geopolitical tensions, bullion prices remained under pressure as markets focused on the likelihood of interest rates remaining high amid persistent inflation risks. He added that the Middle East conflict and rising energy prices have created a challenging environment for gold, with investors shifting focus to macroeconomic factors over geopolitical safe-haven demand.

Jateen Trivedi, VP Research Analyst at LKP Securities, stated that gold prices experienced a steep decline of over $100 in a single session and nearly $300 in the last two days. He attributed this to strong macroeconomic headwinds that continue to weigh on the metal. Recent data indicates that gold has slipped to one-month lows near $4,710, pressured by a stronger dollar and higher bond yields.

Energy Prices and Geopolitical Tensions

Crude oil prices have remained elevated above $100 per barrel, driven by ongoing tensions between the US and Iran, following reports of an Israeli strike that killed a senior Iranian official, Ali Larijani. This has led to further disruptions in the Strait of Hormuz, a key global oil transit route, pushing crude prices near four-year highs. These developments have intensified concerns over energy-driven inflation, which in turn is influencing central bank policies and investor behavior.

Jigar Trivedi, Senior Research Analyst at Indusind Securities, noted that gold prices have fallen for a seventh consecutive day as the escalating war in West Asia has driven oil prices higher and reduced the prospects for a near-term US interest rate cut. Despite the recent decline, gold prices are still up over 10 per cent so far this year, though upward momentum has stalled as investors sold the metal to meet margin calls elsewhere in their portfolios.

Renisha Chainani, head of research at Augmont, emphasized that gold and silver remain under pressure as elevated real yields continue to cap upside potential. She noted that the current environment is dominated by inflation-led policy tightening expectations, which are reducing the likelihood of near-term rate cuts and limiting the metal’s appeal as an investment.

The impact of these developments is being felt across the Indian market, where both gold and silver prices have seen significant declines. Retail investors and jewelers are now facing challenges in maintaining price stability, as demand is shifting in response to macroeconomic factors. Analysts suggest that the situation could remain volatile in the near term, with further declines possible if global markets continue to react to inflationary pressures and geopolitical tensions.

What’s next for gold and silver prices in India? Analysts are closely watching the Federal Reserve’s next policy meeting, expected in late April, as well as developments in the Middle East. If oil prices remain elevated and central banks continue to maintain higher interest rates, the pressure on gold and silver could persist, potentially leading to further declines in the domestic market.